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When demand for a firm's product decreases,the firm can take a number of steps to adjust costs and quantities supplied to the market.Some are listed below.Which actions are short run and which are long run? Explain your reasoning.
a.Layoff 25 percent of the firm's existing employees.
b.Declare bankruptcy and sell all of the firm's plant and equipment.
c.Require management personnel to take a significant cut in pay.
d.Furlough employees for 3 days each month.
e.Move to a smaller production facility.
Hill Climbing
A problem-solving strategy that involves continuous moves towards increasing improvement or higher value.
Mental Set
A psychological term for the tendency to approach situations in a certain way because of past experiences or a specific mindset.
Noncompensatory Modeling
A decision-making approach where a satisfactory level of performance in one attribute does not compensate for a poor performance in another.
Means-end Analysis
A problem-solving strategy that involves identifying the differences between the current situation and the desired goal and steps to reduce these differences.
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