Question

Willow owns a fruit stand in Neverland, a country that has high inflation. Every morning Willow must make new price signs for all of the fruit in her store, raising her price in order to keep up with inflation. This is an example of

A. Menu costs
B. Demand pull inflation
C. Redistribution from lenders to borrowers
D.Shoe leather costs

Answer 1

The situation is an example of menu costs, which refer to the costs incurred by businesses when they have to change their prices due to inflation or other economic factors. Willow, the owner of the fruit stand, has to make new price signs every morning to keep up with the high inflation in Neverland.

Step-by-step explanation:

The situation described in the question is an example of menu costs. Menu costs refer to the costs incurred by businesses when they have to change their prices due to inflation or other economic factors. Willow, the owner of the fruit stand, has to make new price signs every morning in order to keep up with the high inflation in Neverland.

This process of changing prices involves analyzing the market demand, updating sales materials, and redoing product and price labels. These costs of changing prices are similar to the costs of printing new menus with different prices in a restaurant. Due to the high inflation in Neverland, Willow faces the challenge of maintaining accurate prices for her fruit without incurring excessive costs.