In Situations of Sticky Prices and Negative Demand Shocks, We

question 40

Multiple Choice

In situations of sticky prices and negative demand shocks, we would expect firms to

• A)deplete inventories before increasing production.
• B)reduce production before building up inventories.
• C)build up inventories before reducing production.
• D)lower prices before reducing production or building up inventories.

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Definitions:

Computer-Assisted Manufacturing (CAM)

Manufacturing that employs specialized computer systems to actually guide and control the transformation processes.

Computer-Assisted Design (CAD)

The design of components, products, and processes on computers instead of on paper.

Transformation Process

The method by which inputs (such as raw materials, information, or labor) are converted into outputs (products or services) by an organization.