Which of the following best describes the impact of rising menu costs on businesses?

The correct answer highlights how rising menu costs directly impact businesses by increasing their operational costs associated with updating prices. Menu costs refer to the costs that firms incur when they adjust their prices, which can include anything from printing new menus or labels to the cognitive costs of deciding on new pricing strategies. When these costs rise, businesses may be less inclined to change prices frequently due to the higher expenses involved in doing so.

As a result, firms may decide to maintain their existing prices for longer periods instead of adjusting them in response to changes in demand or costs. This can lead to less flexible pricing strategies, as businesses weigh the costs of altering prices against market conditions. Therefore, rising menu costs discourage frequent price changes, leading to a more stable pricing environment for consumers, but this ultimately creates challenges for firms in responding to market dynamics effectively.