Menu cost

Menu Costs
The costs to firms of changing their prices.
Related Terms: ...

Menu Costs and Aggregate-Demand Externalities
One reason prices do not adjust immediately to clear markets is that adjusting prices is costly.

Menu costs
How much it costs to change PRICES. Just as a restaurant has to print a new menu when it changes the price of its food, so many other FIRMS face a substantial outlay each time they cut or raise what they charge.

Menu costs of inflation - The costs associated wit having to adjust the price lists or labels.
MER (Management Expense Ratio) - The proportion of the assets under management that were used to run a mutual fund.

Small-menu cost theory A hypothesis that it is costly for firms to change prices in response to demand changes because of the cost of renegotiating contracts, printing price lists, and so on.

(The term is a humorous reference to the cost of replacing shoe leather worn out when walking to the bank.)
Menu costs: Firms must change their prices more frequently, which imposes costs, for example with restaurants having to reprint menus.

4An alternative way to introduce nominal rigidities has been proposed by Rotemberg (1982), and is based on the assumption that all firms can re-optimize in each period, but in doing so they have to pay a real menu cost proportional to the price ...

See also: Expense, Unit cost, Labour, Short run, Variable cost