esSuppose a firm is currently producing 900 computers per week and charging a price of $1,200 per computer.a. Demonstrate how the firm will respond to a negative demand shock. Assume prices are flexible.Instructions: Use the tool provided, 'S Flexible Prices', to draw the supply curve when prices are flexible. 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 MarketPrice$1,200900Computers per weekDemandToolsS Flexible Pric D Negative ShO b. Generalizing from the computer market specifically to the economy as a whole, what will happen when this negative demand shockoccurs across the economy's many markets?O Real GDP will increase, prices will increase, and unemployment will decrease.O Real GDP will stay the same, prices will decrease, and unemployment will increase.O Real GDP will stay the same, prices will decrease, and unemployment will stay the same.Real GDP will decrease, prices will increase, and unemployment will increase.

Negative demand shock means the shocks which shift the demand curve to the left.

b. Generalizing from the computer market specifically to the economy as a whole, what will happen when this negative demand shock occurs across the economy's many markets? O Real GDP will increase, prices will increase, and unemployment will decrease. O Real GDP will stay the same, prices will decrease, and unemployment will increase. O Real GDP will stay the same, prices will decrease, and unemployment will stay the same. O Real GDP will decrease, prices will increase, and unemployment will increase.

b. Generalizing from the computer market specifically to the economy as a whole, what will happen when this negative demand shock occurs across the economy's many markets? O Real GDP will increase, prices will increase, and unemployment will decrease. O Real GDP will stay the same, prices will decrease, and unemployment will increase. O Real GDP will stay the same, prices will decrease, and unemployment will stay the same. O Real GDP will decrease, prices will increase, and unemployment will increase.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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