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In economics, nominal rigidity, also known as price-stickiness or wage-stickiness, is a situation in which a nominal price is resistant to change. Complete nominal rigidity occurs when a price is fixed in nominal terms for a relevant period of time. For example, the price of a particular good might be fixed at $10 per unit for a year.
The price elasticity of supply (PES or E s) is commonly known as “a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price.” Price elasticity of supply, in application, is the percentage change of the quantity supplied resulting from a 1% change in price.
Cost-push inflation can also result from a rise in expected inflation, which in turn the workers will demand higher wages, thus causing inflation. [2] One example of cost-push inflation is the oil crisis of the 1970s, which some economists see as a major cause of the inflation experienced in the Western world in that decade.
A cost-of-living adjustment (COLA) adjusts salaries based on changes in a cost-of-living index. [128] It does not control inflation, but rather seeks to mitigate the consequences of inflation for those on fixed incomes. Salaries are typically adjusted annually in low inflation economies. During hyperinflation they are adjusted more often. [127]
An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc.) so managers can understand why costs were different from what was planned and take appropriate action to ...
The most common types of costs that are factored into this decision include: [89] Fixed costs; Variable costs; Marginal cost; Average total cost; Sunk costs; The impact of short-run and long run costs are important in determining production in a certain firm . It is assumed some costs are fixed in the short-run and are thus considered "fixed ...
An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc.) so managers can understand why costs were different from what was planned and take appropriate action to ...
When average cost is neither rising nor falling (at a minimum or maximum), marginal cost equals average cost. Other special cases for average cost and marginal cost appear frequently: Constant marginal cost/high fixed costs: each additional unit of production is produced at constant additional expense per unit. The average cost curve slopes ...