Firms that choose to use a fixed-price policy
A)will tend to experience larger inventory changes than firms that follow a flexible-price policy.
B)will tend to experience smaller inventory changes than firms that follow a flexible-price policy.
C)find that their inventories do not respond to demand shocks.
D)will not hold inventories.

Question

Quizplus · Accepted Answer

Firms that choose to use a fixed-price policy will tend to experience larger inventory changes than firms that follow a flexible-price policy because they are less able to adjust their prices in response to changes in demand.

Firms That Choose to Use a Fixed-Price Policy