One explanation for why product prices adjust slowly is that
A) most markets are perfectly competitive.
B) businesses incur menu costs when they change prices.
C) markets clear continuously, making price adjustments difficult.
D) if wages adjust rapidly, prices take a while to catch up.
E) most markets are subject to government price control laws.

Question

Quizplus · Accepted Answer

Businesses incur menu costs when they change prices, such as the cost of printing new menus, updating a website, or changing price tags. These costs can be significant enough that businesses may choose to delay price adjustments even in response to changing market conditions.

One Explanation for Why Product Prices Adjust Slowly Is That