Case Interview Prep

Answer: C - Local bias is not a reason behind price stickiness.

Key Takeaway: Stickiness refers to instances in economics where price, as a variable, does not change as it should in reaction to changing circumstances. Among the reasons for price stickiness are imperfect information, money illusion, and menu costs. Price stickiness can mean an end to business viability; for example, local retailers in a city must adapt their prices to compete with cheaper imports or else they risk losing the business altogether.