Question

As a business owner, you find that your resource prices are increasing often. Because these costs are rising, you find it necessary to change your prices frequently. This best describes: Group of answer choices money illusion. menu costs. hyperinflation. a price confusion problem. future price uncertainty.

Answer 1

B. MENU COST

Step-by-step explanation:

Menu cost refers is the cost incured due to rapid changes in prices. When changing prices of products or services, firms and organizations incur additional cost, this cost is what we refer to as menu cost. With continuous changes, the cost adds up in term of money and time. This is why firms aren't encouraged to changing prices indiscriminately. However in situations like the one presented in the question, with constant changes in the price of inputs used, business owner must also change prices of outputs produced.