Which of the following statements about price stickiness or ﬂexibility is true?
A) Prices of many raw materials are less ﬂexible than the prices of ﬁnal goods and services.
B) Prices of many raw materials are much more ﬂexible than the prices of ﬁnal goods and services.
C) Prices of many raw materials are about as ﬂexible as the prices of ﬁnal goods and services.
D) Prices of many raw materials are only slightly more ﬂexible than the prices of ﬁnal goods and services.

Question

Quizplus · Accepted Answer

Raw material prices are subject to supply and demand factors and may fluctuate more rapidly than prices of final goods and services. Final goods and services may have committed costs such as labor and marketing expenses, which make prices less flexible.

Which of the Following Statements About Price Stickiness or ﬂExibility