Small menu costs and sticky prices At an optimum,firm faces on second-order costs of deviating from optimum. So,if cost of changing prices is small but a little larger than the cost of not adjusting(i.e.,cost of deviating from optimum),then the firm won't change its price. This argument requires the firm to have some degree of monopoly power over its price.• Small menu costs and sticky prices • At an optimum, firm faces on second-order costs of deviating from optimum. • So, if cost of changing prices is small but a little larger than the cost of not adjusting (i.e., cost of deviating from optimum), then the firm won’t change its price. • This argument requires the firm to have some degree of monopoly power over its price