Antonio 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 _____.

Menu costs are costs that firms incurr when they have to update their prices constantly. The may have to print new catalogs, new menus (hence the name). If the business is online, the will have to update the database, and the website. Bookeeping will become more difficult as well.

This also causes problems for customers, who do not know what prices to expect, and might be discouraged to buy. Besides, the inflation rate could be so high, that customers could simply be unable to buy things, since their money might have lost most or all of its value.