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

The option C implies price rigidity due to oligopoly or monopolistic competition, where firms do not change their prices due to fear of retaliation from rivals. However, this would increase short-run price stickiness. Therefore, option C is the incorrect choice as it does not reduce short-run price stickiness.

Which of the Following Is NOT a Factor That Increases