Using production and cost theory

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Reference no: EM13735298

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, you cannot get price increases.” The article offers the following advice for managers: “Productivity growth lets companies boost profits even as prices fall.” Using production and cost theory, comment on this advice.

Reference no: EM13735298

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