All the following explain price stickiness except
A) firms choose not to adjust prices until they can assess if changes in sales are temporary or permanent.
B) the more firms produce, the lower the average cost of production. Therefore, firms are willing to not raise prices as long as they can sell more.
C) firms may be concerned that consumers may be angered by price increases.
D) firms may be concerned that their rivals may not match their price increases.

Question

Quizplus · Accepted Answer

This statement explains why firms may be willing to not raise prices, but it does not fully explain price stickiness. Price stickiness refers to the phenomenon where prices do not respond quickly to changes in supply and demand. Factors such as the ones listed in choices A, C, and D can all contribute to price stickiness.

All the Following Explain Price Stickiness Except