Price stickiness
A) is most acute in instances where hardware changes are necessary for price adjustment.
B) is typically not a factor in agricultural and standardized industrial commodities.
C) often arises due to a phenomenon economists refer to as menu costs.
D) is unlikely to be important in prices negotiated on the spot.
E) all of the above.

Question

Quizplus · Accepted Answer

Price stickiness can occur due to various reasons, including the cost of changing prices (menu costs), which makes it less likely for prices to adjust quickly. It is less common in markets for agricultural and standardized industrial commodities where prices can adjust more freely and is also less relevant in situations where prices are negotiated on the spot, such as in markets without fixed price tags or where bargaining is common. Hardware changes necessary for price adjustment can also contribute to price stickiness, especially in industries where physical price tags or labels are used.

Price Stickiness