The Cost to Firms of Changing Prices

question 243

Multiple Choice

The cost to firms of changing prices

• A)is small even when there is rapid inflation.
• B)is called a menu cost.
• C)does not exist if inflation is perfectly anticipated.
• D)all of the above

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Definitions:

Marginal Cost

The cost added by producing one additional unit of a product or service, a key factor in economic decision-making.

Demand Schedule

is a table that lists the quantity of a good that consumers are willing to buy at different price levels, showing the relationship between price and quantity demanded.

Marginal Cost

The cost of producing one additional unit of a product, reflecting changes in variable cost as output is adjusted.

Average Cost

The total cost of production divided by the number of goods produced, providing a cost per unit of output.