Question

Suppose that Techno TV produces LCD televisions. At a price of $2,000 per television, Techno determines that its optimal output is 3000 television sets per week. If prices are sticky and fears of a recession reduce demand for LCD televisions, we would expect Techno to:________.A. reduce output in the long run.B. reduce output in the short run.C. raise prices in the short run to compensate for lost revenue.D. raise output in the short run.

Answer 1

Answer:

B. Reduce output in the short run

Explanation:

Recession is a period of temporary economic decline during which there is a reduction in economic activities like buying and selling and so on.

So the best decision for techno to take if there are fears of recession is to reduce the amount or quantity of goods they are producing in the short run, because recession is only a period of TEMPORARY decline and not permanent decline.