During recessions, business must
A) cut per-unit production costs so they can cut the selling price and increase sales.
B) reduce output levels to bring quantities supplied in line with the reduced quantity demanded.
C) cut per-unit production costs and increase the selling price, and also increase output levels to bring quantities supplied in line with the expected quantity demanded.
D) increase per-unit production costs so they can reduce sales even further, and also reduce demand to match the quantities supplied.
E) cut per-unit production costs to reduce the selling price, and also reduce output levels to bring quantities supplied in line with the reduced quantity demanded.

Question

Quizplus · Accepted Answer

During recessions, businesses often need to adjust both their production costs and output levels. Reducing per-unit production costs can allow them to lower selling prices, which can help maintain or boost sales in a challenging economic environment. Additionally, reducing output levels helps align the supply with the decreased demand typical of recession periods, preventing excess inventory and potential further losses.

During Recessions, Business Must