Cost changes generally lag behind price changes during the business cycle

Business Dec 23, 2020

Cost changes generally lag behind price changes during the business cycle.

(a) true

(b) false

Expert Solution

True

Prices of the commodities are primarily affected by market fluctuations and market conditions. The fall or rise in the prices causes the surplus of the producers to decrease and increase respectively. The secondary effect of the change in the surplus lies on the cost incurred in the production by the business. The firms can change the cost of production only until it spends on variable costs.

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