Why are prices often referred to as "sticky"?

Prices are often referred to as "sticky" because they resist changes, particularly in response to shifts in supply and demand. This stickiness can be due to several factors, such as contracts, regulations, or psychological pricing strategies that make businesses hesitant to adjust their prices frequently. For instance, businesses may be reluctant to increase prices during a period of rising costs due to fear of losing customers, or they might keep prices stable even in the face of decreased demand to maintain customer loyalty or brand image. This behavior can lead to situations where prices do not adjust quickly to reflect changes in economic conditions, leading to potential inefficiencies in the market. Understanding price stickiness is crucial in macroeconomics as it helps explain why economies may experience prolonged periods of unemployment or low output, even when market conditions would typically suggest otherwise.