When fiRms Face Reduced Demand for Their Goods and Services

question 68

Multiple Choice

When firms face reduced demand for their goods and services during recessions, behavioral economics suggests that the firm should

• A) cut production and lay off workers according to the percent decline in sales.
• B) explain to the workers that in order to make it through the recession, they all need to take a pay cut.
• C) shut down until the recession is over.
• D) increase morale by increasing production and hiring more workers.
• E) reduce pay just for the salaried employees, not the hourly production workers.

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Definitions:

Holographic Wills

Handwritten wills made by the testator, generally without formal witnessing, that may be legally binding in some jurisdictions.

Nuncupative Wills

Verbal wills made by a person in anticipation of imminent death, and witnessed by others, typically needing to meet specific legal standards to be valid.

Witnesses

Individuals who have directly seen an event, such as a crime or a transaction, and can provide a first-hand account of it.

Statute of Frauds

A legal principle requiring certain contracts to be in writing and signed by all parties involved to be enforceable, typically including contracts for the sale of land, long-term contracts, and contracts for goods over a certain value.