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Tim manages a grocery store in a country experiencing a high rate of inflation. To keep up with inflation, he spends a lot of time every day updating the prices, printing new price tags, and sending out newspaper inserts advertising the new prices. His employees regularly deal with customer annoyance over the frequent price changes. This is an example of the __________? of inflation.
a. menu costs
b. shoe-leather costs
c. unit-of-account costs

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luzgiussani

Answer:

The correct answer is option a. menu costs.

Explanation:

In economics we use the term menu costs to talk about the cost caused by companies by changing prices.

As we see in the example, having to constantly change prices in a company will generate expenses, printing new prices and menus, expenses to update the price lists, possible losses in sales due to customer dissatisfaction, etc.

When you do all this, there may be a loss in sales and that is exactly what the menu costs refers to.

Given this information we can say that the correct answer is option A.