“The menu cost model in macroeconomics suggests that businesses don’t change their prices immediately when there are changes in the economy, like a change in demand or production costs. This reluctance is due to the costs associated with changing prices, which are called “”menu costs.”” These costs can be things like reprinting menus, re-tagging items, or the time spent updating prices in a system. Because of these costs, businesses might decide it’s not worth changing prices for small shifts in the economy, leading to price “”stickiness”” – prices that don’t change as quickly as they theoretically could.
