A Firm Practices the Pure Chase Strategy

question 70

Multiple Choice

A firm practices the pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and firing cost is $5 per unit. Over the next year, the sum of hiring and layoff costs will be

• A) $500
• B) $2,500
• C) $7,500
• D) $7,000
• E) $12,500

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Definitions:

Budget Deficit

A shortfall of tax revenue from government spending

Balanced Budget

A financial statement or plan where total revenues are equal to or greater than total expenses, resulting in no deficit.

Inflation Reduction

A decrease in the rate at which the general level of prices for goods and services is rising.

Moderate Inflation

A stable and low level of inflation, which is considered beneficial to economic growth by encouraging spending and investment.