Suppose that, because of inflation, a business in South Africa must calculate, print, and mail a new price list to its customers each month.This is an example of
A)shoeleather costs.
B)costs due to confusion and inconvenience.
C)arbitrary redistributions of wealth.
D)costs due to inflation induced tax distortions.
E)menu costs.

Question

Quizplus · Accepted Answer

This situation is an example of menu costs, which are the costs incurred by businesses to adjust their prices due to inflation or other factors. The costs can include designing and printing new price lists, updating computer systems, and notifying customers of price changes. These costs can be a significant burden on businesses, especially small ones, and can contribute to inflation because businesses may raise prices more than necessary to cover the costs of adjusting prices.

Suppose That, Because of Inflation, a Business in South Africa