Menu costs are an important source of price stickiness because ________.
A)printing menus is costly
B)putting items "on sale" reduces firms' revenue
C)frequent price changes may lead to losing customers
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Menu costs refer to the costs associated with changing prices, not just the physical cost of printing new menus. Frequent price changes can alienate customers, making them less likely to return, which is a significant source of price stickiness.

Menu Costs Are an Important Source of Price Stickiness Because