In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.

Name: In the very short run, ﬁrms tend to respond to demand shocks by changing their prices.
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Question

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In the very short run, firms are more likely to respond to demand shocks by adjusting their output levels rather than changing their prices due to menu costs and the desire to maintain customer relationships and market stability.

In the Very Short Run, ﬁRms Tend to Respond to Demand