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Each of the two models of short-run aggregate supply is based on some market imperfection. In the imperfect-information model, the imperfection is that: a. some firms do not adjust their prices instantly to changes in demand. b. contracts and arrangements may prevent nominal wages from adjusting rapidly to changing economic conditions. c. firms confuse changes in the overall level of prices with changes in relative prices. d. the real wage adjusts to bring labor supply and labor demand into equilibrium.

Respuesta :

Each of the two models of short-run aggregate supply is based on some market imperfection. In the imperfect-information model, the imperfection is that (C) firms confuse changes in the overall level of prices with changes in relative prices.

What is aggregate supply?

  • Aggregate supply, also known as domestic final supply in economics, is the total supply of goods and services that enterprises in a national economy intend to sell within a certain time period.
  • It is the entire amount of goods and services that enterprises in an economy are willing and able to sell at a particular price level.

What is the relative price?

  • A product's comparable pricing is the price of one product in comparison to another.
  • It is expressed as a ratio of the pricing of two different products or services.
  • Divide the price of one product by the price of another to get the relative pricing of a product.

Firms mix up changes in the overall price level with changes in relative prices.

Therefore, the correct answer is (C) firms confuse changes in the overall level of prices with changes in relative prices.

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https://brainly.com/question/1245771

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