Saturday, May 17, 2008

Some Menu Costs Aren't So Small

I just mentioned I went to visit my hometown for a few days. Here's a Washington Post article on how rising gas prices are affecting a small business owner in the county I grew up in:
Like a lot of small-scale entrepreneurs, Cathy Osborne worries that she'll go out of business if fuel prices rise above $4 a gallon. Not because she won't be able to buy gas at that price, but because she won't be able to sell it.

The old mechanical gas pumps with scrolling dials at her country store in Fauquier County lack the gears to go beyond $3.99 a gallon...."I don't know what I'm going to do. I don't have $30,000 to invest in new pumps."
Here is the definition of menu costs.

(HT Greg Mankiw)

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