The menu cost theory states that
A) wages depend on the productivity of workers.
B) economic agents quickly learn the likely responses of the Fed to changes in unemployment.
C) the economy is characterized by perfect competition.
D) prices are not fully flexible because it is costly for firms to change prices every time there is a demand change.
D
You might also like to view...
Consumers in a monopolistically competitive market do not receive any consumer surplus because the price paid for the product exceeds the marginal cost of production
Indicate whether the statement is true or false
According to the text, the price elasticity of demand for bath tissue has been estimated to be -2.42. This implies that a 10 percent decrease in the price of bath tissue would cause the quantity demanded of bath tissue to:
A) increase by 2.4 percent. B) decrease by 2.4 percent. C) increase by 24.2 percent. D) decrease by 24.2 percent.