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 changing prices frequently, even in response to changes in demand. Therefore, choice D is the correct answer. Choices A, B, and C are unrelated to menu costs.

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Menu Costs Are

Question 274

Multiple Choice

Menu costs are

A) the constantly changing resource prices that make planning for firms difficult.
B) the advertised prices for final products that firms guarantee for a certain period of time.
C) the cost of compliance with government regulations.
D) the costs that deter firms from changing prices in reaction to demand changes.

Correct Answer: