Which of the following statements regarding the relationship between input prices and output prices is true?
A) Input prices adjust slower than output prices.
B) Output prices adjust slower than input prices.
C) Input prices and output prices adjust at the same rate.
D) Input prices adjust before output prices.
E) Input prices and output prices adjust at random times.

Question

Quizplus · Accepted Answer

Input prices, such as the cost of raw materials or labor, tend to adjust slower than output prices because they are often contracted for longer periods of time or require more negotiations to change. On the other hand, output prices are more responsive to changes in demand and competition, resulting in faster adjustments.

Which of the Following Statements Regarding the Relationship Between Input