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

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Menu costs refer to the costs that firms incur when changing prices, such as the cost of printing new menus or updating price tags. These costs can deter firms from adjusting prices frequently in response to changes in demand, leading to sticky prices. Transaction costs refer to the costs of making a transaction, such as the cost of negotiating a contract, and are not directly related to price changes. Implicit costs are opportunity costs that arise from using resources for a particular activity, and are also not directly related to price changes.

Costs That Deter Firms from Changing Prices in Response to Demand