Sticky prices imply that some firms are afraid to cut their prices because they are afraid of price wars.
Subtopic: How sticky are prices

Question

Quizplus · Accepted Answer

Sticky prices refer to the tendency of some firms to maintain their prices even when there are changes in demand or supply. This is because they fear that cutting prices could trigger a price war with their competitors, which could hurt their profits in the long run. Therefore, the statement that sticky prices imply fear of price wars is true.

Sticky Prices Imply That Some Firms Are Afraid to Cut