The cost to firms of changing prices
A)is small even when there is rapid inflation.
B)is called a menu cost.
C)does not exist if inflation is perfectly anticipated.
D)will make prices perfectly fixed.
E)all of the above

Question

Quizplus · Accepted Answer

The cost to firms of changing prices is known as menu cost. It includes costs such as printing new menus or updating prices in computer systems. This cost exists regardless of the level of inflation and can make firms hesitant to change prices frequently.

The Cost to Firms of Changing Prices