The distinction between price confusion problems and menu costs is that
A) price confusion results from confusion between relative demand and inflationary pressures,whereas menu costs have to do with people confusing changes in nominal and real wages.
B) menu costs result from confusion between relative demand and inflationary pressures,whereas price confusion has to do with people confusing changes in nominal and real wages.
C) price confusion results from confusion between relative demand and inflationary pressures,whereas menu costs relate to producers changing prices,typically during inflationary periods.
D) menu costs occur during deflation,whereas price confusion problems occur during inflation.
E) menu costs only affect the food industry,whereas price confusion problems occur in high-tech industries.

Question

Quizplus · Accepted Answer

Price confusion problems refer to consumers being confused about the actual price of a good due to inflationary pressures, whereas menu costs involve the costs incurred by producers in changing their prices, typically during inflationary periods. Therefore, option C correctly distinguishes between the two concepts. The other options either incorrectly attribute price confusion or menu costs to other factors, or provide irrelevant information.

The Distinction Between Price Confusion Problems and Menu Costs Is