Firms do not change prices frequently because

Question

Quizplus · Accepted Answer

Changing prices often requires adjusting price lists, updating inventory systems, reprinting menus, and informing staff and customers. These tasks involve administrative costs, which can be substantial for firms, especially those with a large number of products or services, and those operating in highly competitive markets where small price changes can affect sales volumes. Therefore, firms often prefer to keep prices stable for long periods and adjust them only when necessary, such as when cost or demand conditions change significantly.

Firms Do Not Change Prices Frequently Because