Refer to the graphs. Suppose a firm is currently producing 500 computers per week and charging a price of $1,000. What happens to the firm's inventory of computers if there is a negative demand shock and prices are inflexible?

Question

Business

Isabela Bowen

9 July, 17:11

Refer to the graphs. Suppose a firm is currently producing 500 computers per week and charging a price of $1,000. What happens to the firm's inventory of computers if there is a negative demand shock and prices are inflexible?

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Answers (1)

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Taylor Sparks · Answer 1

the firm's inventories will increase by 200 computers per week.

Explanation:

Based on the information provided within the question it can be said that the in this scenario this would cause the firm's inventories will increase by 200 computers per week. This is due to there being less demand for the product at that price, therefore people by less and since prices are inflexible they cannot lower them to increase sales at a lower profit.