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An article in Business Week warned of the dangers of deflation as the collapse of numerous Asian eco Show more 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 todays age you cannot get price increases. The article offers advice to managers: Productivity growth lets companies boost profits even as prices fall. Using short-run production and cost theory comment on this advice. Show less
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