Refer to the graphs above. Suppose a firm is currently producing 500 computers per week and charging a price of $1000. 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 $1200
C) The firm will cut production to 300 computers per week and charge a price of $1000
D) The firm will cut production to 300 computers per week and charge a price of $600

Question

Refer to the graphs above. Suppose a firm is currently producing 500 computers per week and charging a price of $1000. 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 $1200 
C) The firm will cut production to 300 computers per week and charge a price of $1000 
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 above. Suppose a firm is currently producing 500 computers per week and charging a price of $1000. 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 $1200 
C) The firm will cut production to 300 computers per week and charge a price of $1000 
D) The firm will cut production to 300 computers per week and charge a price of $600

Refer to the Graphs Above