Which of the Following Statements Best Describes How fiRms Respond

question 13

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.

---

Definitions:

Famous Artists

Individuals known for their significant contributions and innovation in the field of visual arts, such as painting, sculpture, and drawing.

Art History

The academic study of objects of art in their historical development and stylistic contexts, such as genre, design, format, and style.

Terminal Decline

A significant drop in an individual’s cognitive and physical abilities that occurs shortly before death.

Cognitive Abilities

Mental capabilities involved in the process of acquiring knowledge and understanding through thought, experience, and senses.