Sticky prices cause an economic coordination problem for the economy because:
A) they are likely to cause the CPI to understate the actual increase in the cost of living.
B) they increase the transaction costs in open market auctions.
C) they confuse the signal system that brings together consumers and producers.
D) they confuse the system of custom prices.

Question

Quizplus · Accepted Answer

Sticky prices create confusion in the signal system that brings together consumers and producers as they do not adjust in response to changes in the supply and demand conditions of the market, leading to potential market disequilibrium and decreased economic efficiency.

Sticky Prices Cause an Economic Coordination Problem for the Economy