According to the sticky price theory, which of the following is consistent with an unexpected fall in the price level?
A)Some firms' prices are lower than desired, which increases their sales.
B)Some firms' prices are lower than desired, which depresses their sales.
C)Some firms' prices are higher than desired, which increases their sales.
D)Some firms' prices are higher than desired, which depresses their sales.

Question

Quizplus · Accepted Answer

According to the sticky price theory, if the price level falls unexpectedly, some firms may not adjust their prices immediately. If their prices are higher than the new market level, it can depress their sales as consumers opt for cheaper alternatives.

According to the Sticky Price Theory, Which of the Following