Suppose a firm is currently producing 900 computers per week and charging a price of $1,200...

 

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Suppose a firm is currently producing 900 computers per week and charging a price of $1,200 per computer. a. Demonstrate what happens to the firm's inventory if there is a negative demand shock. Assume prices are fixed. Instructions: Use the tool provided, 'S Fixed Prices, to draw the supply curve when prices are fixed. Then use the tool provided. "D Negative Shock', to illustrate the shift in the aggregate demand curve when there is a negative demand shock Computer Market Price $1,200 900 Computers per week Demand Tools S Fixed Prices D Negative Sh © b. Generalizing from the computer market specifically to the economy as a whole, what will happen when this negative demand shock occurs? Suppose a firm is currently producing 900 computers per week and charging a price of $1,200 per computer. a. Demonstrate what happens to the firm's inventory if there is a negative demand shock. Assume prices are fixed. Instructions: Use the tool provided, 'S Fixed Prices, to draw the supply curve when prices are fixed. Then use the tool provided. "D Negative Shock', to illustrate the shift in the aggregate demand curve when there is a negative demand shock Computer Market Price $1,200 900 Computers per week Demand Tools S Fixed Prices D Negative Sh © b. Generalizing from the computer market specifically to the economy as a whole, what will happen when this negative demand shock occurs?

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Solution Part1 Price 1200 GRAPH 900 S Fixed Prices Demand D Negative Shock Computers per week E... View the full answer