Costs that deter firms from changing prices in response to demand changes are known as

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Menu costs refer to the expenses associated with changing prices, such as reprinting menus, catalogs, and price lists. These costs deter firms from changing prices frequently in response to demand changes. Sticky costs, on the other hand, are costs that do not change immediately in response to changes in sales volume, such as rent or insurance. Policy costs and production costs are not directly related to the decision to change prices.

Costs That Deter Firms from Changing Prices in Response to Demand