Some economists suggest that because of the costs of negotiating contracts, printing price lists, etc., it is costly for firms to change prices in response to demand changes. This hypothesis is known as the

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The hypothesis that it is costly for firms to change prices in response to demand changes is known as the menu cost theory. This refers to the costs associated with updating menus, price lists, and negotiating contracts. The term "menu cost" is typically used to refer to these broader costs associated with changing prices in the economy, rather than just the literal cost of reprinting menus.

Some Economists Suggest That Because of the Costs of Negotiating