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August 21, 2014

Homework Help: economics

Posted by Melissa on Tuesday, February 21, 2012 at 6:05pm.

An article in Business Week warned of the dangers of deflation as the collapse of numerous Asian economies was creating worries that Asia might try to “ export its way out of trouble” by oversupplying everything from automobiles to semiconductors. Evidence that deflation had become a genuine concern for managers was provided by a statement in the article by John Smith, chairman and CEO of General Motors Corporation: “Fundamentally, something has changed in the economy. In today’s age, you cannot get price increases. ” The article offers the following advice to managers: “Productivity growth lets companies boost profits even as prices fall.” Using short-run production and cost theory, comment on this advice.

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