Your research about the economic conditions for both the U.S. and South Korea has been successful and the Board is now concerned about revenue and it is the next in their discussion agenda. The Board is still considering relocating the manufacturing operation back to the United States. You are now required to explain and discuss how this action would affect consumer demand. Specifically, you are to discuss if the elasticity of demand for auto parts is considered to be relatively inelastic, relatively elastic, unitary elastic, perfectly elastic, or perfectly inelastic and based on your knowledge of elasticity, what recommendations would you have for AutoEdge Board of governors.
Additional Information: The board of directors at AutoEdge is actively discussing several options to address flagging revenue. One option continues to surface during each board meeting; that is, relocating the manufacturing operation back to the United States. Longtime Chief Financial Officer, Ingrid Adams, leads the group that is in favor of this option.
Ingrid Adams approaches you in the company break room.
"Hello," she says. "I'm glad I saw you."
"Hi," you say. "What can I do for you?"
"I have a question about economics," she says. "I think you can help me explain something to some shareholders on the board."
"Economics! My favorite subject," you say. "What's your question?"
"If AutoEdge decided to increase its prices and return to the United States," she says, "how would this action affect consumer demand? I want to know your opinion about elasticity."
"Sure," you say. "So you want to know if the elasticity for auto parts is considered to be relatively inelastic, relatively elastic, unitary elastic, perfectly elastic, or perfectly inelastic. Right?"
"Exactly," she says.
"I have an opinion," you say. "Do you want to talk about it now, or do you want something in writing?"
"Something in writing would be best," she says. "Would you explain your opinion so that I can respond to questions from other members of the board, too?"
"I'd be glad to," you say. "I'll put something together this afternoon and get it to you before I leave today. Is that soon enough?"
"Perfect," she says. "Thanks for your help."
Must cover the following 600-800 words
Discuss different types of Elasticity of Demand
What type of Elasticity of Demand does auto parts in the United States have? Is it Elastic, Inelastic, Unitary Elastic, Perfectly Elastic, or Perfectly Inelastic? Discuss and give evidence of your finding.
If AutoEdge decided to increase its prices and return to the United States, based on your research findings, how would this action affect consumer demand? Be sure to apply your knowledge to real life situation and use real life examples
What Recommendations would you have for AutoEdge about their decision to relocate the manufacturing operation back to the United States? Give real life examples