Suppose that Dell Corporation has 20 000 computers in its warehouses on December 31, 2012, ready to be shipped to merchants (each computer is valued at $500). By December 31, 2013, Dell Corporation has 25 000 computers ready to be shipped, each valued at $450.

a. Calculate Dell’s inventory on December 31, 2012.

b. Calculate Dell’s inventory investment in 2013.

c. What happens to inventory spending during the early stages of an economic recession?