Question

                                                                                                           decrease in Aggregate Demand Aggregate Supply

Dell Technologies Inc. lowered its annual revenue forecast after component shortages from supplier Intel Corp. blunted growth prospects despite buoyant corporate demand for new personal computers. Political and economic uncertainty also is weighing on sales of servers to big business clients.

Adjusted sales will be $91.8 billion to $92.5 billion for fiscal year 2020, Dell Chief Financial Officer Tom Sweet said Tuesday during a conference call with analysts. The company said in August that revenue would be $93 billion to $94.5 billion in the fiscal year ending in January.

Intel said last week it’s facing challenges delivering components to customers because of tight supply and limited chip inventories. Sweet said the development will affect Dell’s ability in the current period to produce some commercial computers for corporate clients, which is a key market. Business purchases of Dell’s PC often spur the sales of additional products and services, generating a higher profit margin.

The company also continues to contend with falling demand for servers amid geopolitical and trade tensions. Weaker sales in China and among large corporate clients led a 16% decline in third-quarter revenue from servers and networking gear.

“Obviously we’re not extraordinarily happy with them right now,” Sweet said about Intel in an interview. “I don’t have a pathway to mitigate the supply constraints that they’ve given me for Q4.”

Shares fell more than 3% in extended trading, after closing at $53.19 in New York. The stock has gained 8.8% this year.

This is the second time Dell has cut its annual sales forecast in the past three months. Sweet said he had always expected to narrow the range, as he did in August, because the initial revenue guidance was broad.

Earlier, Dell said adjusted revenue increased 1.2% to $22.9 billion in the fiscal third quarter, just missing analysts’ average estimate of $23 billion.

Dell reported profit, excluding some items, of $1.75 a share in the quarter ended Nov. 1. Analysts, on average, projected $1.59, according to data compiled by Bloomberg. During the conference call, Dell raised the low end of its 2020 earnings forecast to $7.25 to $7.40 a share, from $6.95 to $7.40. Lower component prices have aided the profit margins of Dell and rival HP Inc., which also reported earnings Tuesday.

Revenue in the personal computer division increased 4.6% to $11.4 billion in the quarter. Commercial sales rose 9.4% due to corporate clients upgrading their computers to adopt Microsoft Corp.’s Windows 10 operating system. Revenue from consumers, on the other hand, fell 6.4% in the period.

Sales from Dell’s data-center unit declined 6.1% to $8.39 billion, the Round Rock, Texas-based company said in a statement. Storage hardware sales increased 6.9%, but servers and networking gear pulled down the unit.

Dell’s revenue growth is helped by its majority interest in software maker VMware Inc. VMware reported sales Tuesday that exceeded analysts’ estimates, rising 12% to $2.46 billion. Profit, excluding some items, was $1.49 a share, topping analysts’ average estimate of $1.42. VMware makes software that allows customers to combine multiple tasks on a single server, and is trying to shift to selling more programs that help companies run applications in the cloud and in their own data centers.

Dell repaid about $1.1 billion of gross debt in the most recent period and has paid down about $3.5 billion so far this year. The company said it repaid more than $18 billion in gross debt since its EMC Corp. acquisition, announced at $67 billion, closed three years ago and is on target to repay about $5 billion of gross debt in fiscal 2020.

1. Explain in detail what the article is about

2. why it is an example of decrease in Aggregate Supply shifting.?

3. explain in detail why this article is an example of the shift?

4. explain what would be happening in the graph in detail, including changes in equilibrium price level and Real GDP as a result of the shift

                  please show example of decrease graph supply and demand

Answer 1

1. The article states that decrease in the supply of inputs by Intel Corporation to Dell which is the manufacturer of personal computers mainly for corporate purposes is impacting the overall revenue and growth of Dell Company. It has also led to reduction in the sales forecast of the company.

2. The example depicts that decrease in the supply of inputs has led to fall in the overall supply of computers by Dell. When the supply of inputs used in the production process are reduced, then the overall supply of the product also falls and this leads to fall in production at each price level in the economy leading to leftward shift of the aggregate supply curve in the economy.

3. This article is an example of the shift because change in the quantity of production is caused not by the change in the price level but because of reduction in the amount of inputs available for production of personal computers. Thus, it denotes a shift rather than movement along the curve.

4. The graph is depicted as follows:

-- Art As Price of a Level Real a DP у у

The above diagram shows that initial equilibrium occurs at point E1 with P1 as the initial price level and Y1 represents initial level of real GDP in the economy. A decrease in the level of aggregate supply will shift the AS curve leftwards to AS' shifting equilibrium from point E1 to E2 leading to increase in equilibrium price level to P2 and fall in the level of real GDP to Y2.