Question

In the short-run: A)Group of answer choices B)Output is determined by spending. C)Output is at full...

In the short-run:

A)Group of answer choices

B)Output is determined by spending.

C)Output is at full employment.

D)Output may or may not be at full employment.

E)Output is determined by the factors of production.

F)Prices are “sticky” and cannot fully adjust to changes in supply and demand.

G)Prices are flexible.

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Homework Answers

Answer #1

Option F

( Prices are sticky and cannot fully adjust to changes in the demand and supply.)

EXPLANATION-

Sticky prices are prices that don't respond quickly or immediately to the economic changes. It shows the resistance of prices to change even when the supply or demand of certain commodity changes. When prices cannot adjust immediately to changes in economic conditions, there is an inefficiency in the market which also means there won't be full employment in the economy. This is the reason why short run supply curve is upward sloping while long run supply curve is a vertical straight line.

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