What Are Menu Costs

question 86

Multiple Choice

What are menu costs?

• A)the full list of a firm's costs of production
• B)the costs to a firm of changing prices
• C)the cost to a household of borrowing money when there is deflation
• D)the opportunity cost of dining in a restaurant instead of at home

---

Definitions:

States Of Nature

Alternative conditions or scenarios in decision-making, reflecting different possible outcomes that are generally outside the control of the decision maker, with their uncertainties critical in risk analysis and management.

Expected Opportunity Loss

The anticipated loss in value resulting from not choosing the best action or decision under uncertainty.

Perfect Information

A theoretical concept where all participants have access to all relevant information, making fully informed decisions possible.

Preposterior Analysis

An evaluation method used in decision theory to assess the value of collecting additional information before making a decision.