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 theory suggests that the costs of negotiating contracts and printing new price lists make it difficult for firms to adjust prices quickly and easily, leading to "sticky" prices that do not always respond to changes in supply and demand.

Some Economists Suggest That Because of the Costs of Negotiating