Which of the Following Statements Best Describes How Firms Respond

question 60

Multiple Choice

Which of the following statements best describes how firms respond to demand shocks under conditions of inflexible prices?

• A)Firms respond to shorter-term demand shocks by adjusting production levels; more persistent changes in demand result in changes in inventories.
• B)Firms respond to shorter-term demand shocks by adjusting inventories; more persistent changes in demand result in changes in production levels.
• C)Firms are reluctant to adjust inventory levels because the costs are higher than changing the quantity of output produced.
• D)Firms are quick to let go of workers when negative demand shocks occur.

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Definitions:

Retina

The light-sensitive layer of tissue at the back of the inner eye that converts light images to electrical signals sent to the brain.

Fovea

The fovea is a small depression in the retina of the eye where visual acuity is highest due to the concentration of cones, which are responsible for color vision.

Blind Spot

The area in the human visual field that lacks light-detecting photoreceptor cells, resulting from the optic nerve head's location on the retina.

Bipolar Cells

Cells found in the retina of the eye that act as intermediaries between photoreceptors (rods and cones) and ganglion cells, transmitting visual information.