Which of the following statements about price wars is true?
A)Firms that have to deal with the possibility of price wars often have extremely flexible prices.
B)Firms that do not have to deal with the possibility of price wars often have sticky prices.
C)Price wars tend to increase the short-run flexibility of prices.
D)Firms that have to deal with the possibility of price wars often have sticky prices.

Question

Quizplus · Accepted Answer

Firms that have to deal with the possibility of price wars often have sticky prices because they avoid changing prices frequently to prevent triggering a price war.

Which of the Following Statements About Price Wars Is True