An Associated Press article about sticky prices states: “That’s what analysts call it when companies slap higher prices on products and keep them there even though the rationale for the price hikes is gone.”
a. Prices for goods such as cereal and toothpaste did not fall during the 2007–2009 recession. Why might these prices be sticky?
b. Prices for goods such as oil and wheat did fall during the 2007–2009 recession. Why are these prices different from the prices for goods such as cereal and toothpaste?