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In the short run, an unexpected increase in prices will - reduce resource prices and increase...

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In the short run, an unexpected increase in prices will

- reduce resource prices and increase the quantity of goods supplied.

- decrease the productive capacity of firms and decrease the quantity of goods supplied.

- increase the profits of firms, thereby leading them to expand output.

- increase the profits of firms, thereby leading them to reduce output.

Unexpected Price Changes:

An unexpected increase in price could happen because of an unexpected increase in demand. When such a change is unexpected, the individuals in the economy are not prepared.

Answer and Explanation: 1

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The correct option is - increase the profits of firms, thereby leading them to expand output.

If price increases unexpectedly, wages do not have the...

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Unanticipated Inflation: Definition & Overview

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Chapter 5 / Lesson 12
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Learn about unanticipated inflation and understand how it occurs. Compare the advantages and disadvantages and see who benefits from unanticipated inflation.


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