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andrey2020 [161]
2 years ago
12

Would firms have an incentive to change their level of production if input prices adjusted immediately to output price changes?

Business
1 answer:
statuscvo [17]2 years ago
7 0
Firms have<span> no</span>incentive<span> to </span>increase production<span> to take advantage of higher prices </span>if<span> they simultaneously face equally higher resource prices. So the answer to this question is No. </span>The<span> availability and productivity of real resources is reflected </span>in the<span> prices of inputs, and </span>in the<span> long run these </span>input prices<span> (including wages) </span>adjust<span> to match </span><span>changes in the price level.</span>
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