Your firm expands its output in a time when demand appears to be increasing.Demand for all goods is increasing because of inflation,and consumers want to buy all goods faster because their real purchasing power is falling due to inflation.This situation could indicate that your firm experienced
A) future price uncertainty.
B) menu costs.
C) money illusion.
D) deflation.
E) a price confusion problem.

Question

Quizplus · Accepted Answer

The firm may be experiencing a price confusion problem, where it is difficult to determine whether the increase in demand is due to genuine consumer interest or simply a result of inflation.

Your Firm Expands Its Output in a Time When Demand