Price rigidity is the tendency for all firms in an industry to charge approximately the same price for a specific product over long periods of time.

Question

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Price rigidity occurs when firms in an industry have similar costs and market power, leading them to set similar prices for their products over time, even as market conditions change. This can be due to various factors, such as fears of retaliation from competitors or a lack of differentiation among products.

Price Rigidity Is the Tendency for All Firms in an Industry