Fixed resource prices help explain why firms
A)increase output in the short run when the price level increases
B)keep production levels constant in the short run when the price level decreases
C)sell output in the short run at fixed prices
D)increase output in the long run when the price level increases
E)decrease production when nominal wages fall in the long run

Question

Quizplus · Accepted Answer

In the short run, fixed resource prices mean that firms can increase output when the price level rises because their costs remain constant, allowing them to take advantage of higher prices to increase profits.

Fixed Resource Prices Help Explain Why Firms