If the menu cost theory is true,then firms that change prices less frequently than other firms are likely to be in
A)more competitive industries.
B)service, rather than manufacturing, industries.
C)growing, rather than declining, industries.
D)less competitive industries.

Question

Quizplus · Accepted Answer

According to the menu cost theory, firms that change their prices less frequently are likely to be in less competitive industries because they have enough market power to avoid frequent price changes without losing customers. In more competitive industries, firms are forced to adjust prices more frequently to stay competitive.

If the Menu Cost Theory Is True,then Firms That Change