What are menu costs?
A)the full list of a firm's costs of production
B)the costs to a firm of changing prices
C)the cost to a household of borrowing money when there is deflation
D)the opportunity cost of dining in a restaurant instead of at home
E)the cost of borrowing money to start a restaurant

Question

Quizplus · Accepted Answer

Menu costs refer to the costs that a firm incurs when it changes its prices. These costs include printing new menus, changing price tags, updating computer systems, and communicating the new prices to customers. Option A is incorrect because it refers to the full list of a firm's costs of production, which includes many other costs besides menu costs. Option C is incorrect because it refers to the cost to a household of borrowing money during deflation, which is not related to menu costs. Option D is incorrect because it refers to the opportunity cost of dining in a restaurant instead of at home, which is not related to menu costs. Option E is incorrect because it refers to the cost of borrowing money to start a restaurant, which is not related to menu costs.

What Are Menu Costs