Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. How will the ﬁrm respond to a negative demand shock if prices are ﬂexible?
A) The ﬁrm will continue to produce 500 computers per week and charge a price of $600.
B) The ﬁrm will continue to produce 500 computers per week and charge a price of $1,200.
C) The ﬁrm will cut production to 300 computers per week and charge a price of $1,000.
D) The ﬁrm will cut production to 300 computers per week and charge a price of $600.

Question

Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. How will the ﬁrm respond to a negative demand shock if prices are ﬂexible?
A) The ﬁrm will continue to produce 500 computers per week and charge a price of $600. 
B) The ﬁrm will continue to produce 500 computers per week and charge a price of $1,200. 
C) The ﬁrm will cut production to 300 computers per week and charge a price of $1,000. 
D) The ﬁrm will cut production to 300 computers per week and charge a price of $600.

Quizplus · Accepted Answer

The Answer of  Refer to the graphs. Suppose a ﬁrm is currently producing 500 computers per week and charging a price of $1,000. How will the ﬁrm respond to a negative demand shock if prices are ﬂexible?
A) The ﬁrm will continue to produce 500 computers per week and charge a price of $600. 
B) The ﬁrm will continue to produce 500 computers per week and charge a price of $1,200. 
C) The ﬁrm will cut production to 300 computers per week and charge a price of $1,000. 
D) The ﬁrm will cut production to 300 computers per week and charge a price of $600.

Refer to the Graphs