Final answer:
A food business manager can influence variable costs such as inventory levels and staffing but has less control over input prices affected by global markets. Decisions on passing costs to consumers depend on the price elasticity of demand and must weigh the potential menu costs associated with price changes.
Step-by-step explanation:
A food business manager can directly influence various costs, specifically variable costs. These are costs associated with inputs that can be easily adjusted in the short term, such as inventory levels. For example, the manager of a pizza shop can order more or fewer ingredients based on demand, thereby directly influencing the cost of goods sold. They may also have some control over labor costs by adjusting staff hours or hiring temporary staff.
However, it's worth noting that not all costs are directly controllable. For example, input prices subject to international market rates, like the price of coffee for coffee shops, are beyond a manager's control. In situations where input costs rise, managers must decide whether they can pass these costs onto consumers without negatively affecting demand, considering the price elasticity of demand for their product. At the same time, firms face menu costs—the costs associated with changing prices, which include resources used for analyzing competition, market demand, updating sales materials, and customer relations. Therefore, the process of adjusting prices is not always straightforward and comes with its challenges and costs.