Menu Costs

Definition

Menu costs are the expenses incurred by firms when they need to change their prices due to factors such as inflation or other economic conditions. These costs include printing new menus, updating price tags, or modifying online listings.

Related terms

Price Stickiness: Price stickiness refers to the tendency of some prices in an economy to resist changes even when market conditions shift. This can lead to temporary imbalances between supply and demand.

Wage Rigidity: Wage rigidity refers to the resistance of wages (employee salaries) to change quickly in response to economic conditions. It can contribute to unemployment during periods of economic downturns.

Cost-Push Inflation: Cost-push inflation occurs when there is an increase in production costs (e.g., wages or raw materials), which leads firms to raise their prices, contributing to overall inflationary pressures.