In the ________,an increase in the price level induces firms to expand production because prices of inputs are held constant so the higher prices for their product implies that it is profitable to expand production.
A)short run
B)long run
C)medium run
D)inflationary period

Question

Quizplus · Accepted Answer

In the short run, firms often face fixed costs and input prices, meaning that when the price level for the goods or services they sell increases, they can potentially make higher profits by increasing production. This is because their costs do not immediately adjust to the higher price level, making it profitable to expand production in response to higher demand or prices.

In the ________,An Increase in the Price Level Induces Firms