Which of the following is not a factor that increases short-run price stickiness?
A) Consumers tend to prefer stable prices.
B) Stable prices make it easier for consumers to plan their spending.
C) A ﬁrm can lower its price without fear that rival ﬁrms will also lower their prices.
D) Firms try to avoid price wars.

Question

Quizplus · Accepted Answer

A firm can lower its price without fear that rival firms will also lower their prices actually decreases price stickiness, making prices more flexible in the short run. The other options all indicate reasons why prices may be more sticky in the short run.

Which of the Following Is Not a Factor That Increases