Question: For example, the misperoeptions theoryr asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider

For example, the misperoeptions theoryr asserts that changes in the price

level can temporarily mislead firms about what is happening to their output

For example, the misperoeptions theoryr asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will 7 , and if the fam'ier mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by V the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to v the natural level of output in the short run

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