Overview
Assignment Content
Competency
Calculate cross price elasticity of demand, utility, and productivity.
Student Success Criteria
View the grading rubric for this deliverable by selecting the “This item is graded with a rubric” link, which is located in the Details & Information pane.
Scenario
As an economic consultant at Lightning Volt Automotive, you are asked to evaluate consumer price elasticity of demand and determine whether consumers are sensitive to increases in price, which could help determine pricing schedules in the short run. Also, you will calculate the cross-price elasticity of demand between Lightning Volt Automotive and Ford Motor Company as well as the relationship between both firms. Lightning Volt Automotive needs to analyze the optimal number of employees to hire to ensure that a higher return is earned since labor wages, on average, account for 35% of initial production costs.
Instructions
Address the following in a Word document.
Explain the difference between elastic, inelastic, and unitarily elastic goods and services.
Discuss whether consumers have an elastic, inelastic, or unitarily elastic demand for electric vehicles.
Calculate the cross-price elasticity of demand of electric and gasoline-driven vehicles. If the price of electric vehicles decreased by 10% and the quantity of gasoline driven vehicles decreased from 10 million vehicles to 7.5 million vehicles, what is cross-price elasticity of demand?
Determine whether electric vehicles and gasoline vehicles are substitute or complementary goods and explain your reasoning.
Complete the table attached here (copy the table into your Word document). Determine the optimal number of employees Lightning Volt Automotive should hire and explain why.
PLEASE FOLLOW RUBRIC CLOSELY!!
Rubric:
1. Elasticity of Goods and Services
A - 4 - Mastery
Comprehensive explanation of goods and services as being elastic, inelastic, and unitarily elastic.
2. Consumer Elasticity of Demand
A - 4 - Mastery
Comprehensive discussion of consumer elasticity of demand for goods sold by the firm.
3. Cross-price Elasticity of Demand
A - 4 - Mastery
Cross-price elasticity of demand is correctly calculated, followed by a comprehensive explanation of whether electric and gasoline vehicles are substitute or complementary goods.
4. Productivity
A - 4 - Mastery
Comprehensive explanation of the optimal number of employees that should be hired, and the table is completed correctly.
5. Spelling, Grammar, and APA Format
A - 4 - Mastery