ECON616-1304B-04 Class Applied Managerial Economics ECON616-1304B-04 Phase 2 DQ and IP Week 2 Applied Managerial Economics Phase 2, Elasticities & Market Structure

Phase 2 - Task 1
Task Type:
Discussion Board
Deliverable Length:
Primary Task: 600–800 words
Primary Discussion Response is due by Wednesday

Primary Task Response: Within the Discussion Board area, write 600–800 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas.

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."

Phase 2 - Task 2
Task Type:
Individual Project
Deliverable Length:
1,200–2,000 words, including research in essay format
At midday, you share an elevator ride with AutoEdge's Executive Vice President, George Wirtz.

"Ingrid tells me you gave her some useful information about the relocation issue," he says. "I could use your help with a presentation I'm making next week to a group of large shareholders."

"Of course," you say. "How can I help?"

"I understand that there are four different types of market structures: monopoly, oligopoly, monopolistic competition, and pure competition," he says. "I know that each of these market structures differs in the number of companies that compete in each one, the level of competition, entry and exit in the economy, the product price range, and the product range."

"I'm with you so far," you say.

"Normally, I wouldn't go into all of these economic terms with shareholders," he says, "but I'll be talking to a small group of sophisticated businesspeople who understand the terminology. I'm not an expert in this end of the business, and I want to check my understanding of it. What type of market structure does AutoEdge fit into? How does this market structure impact our level of competition, elasticity of demand, price, and position in the industry?"

"Well, there's a long and a short answer I could give you," you say. "I'm on my way to a lunch meeting right now and will be out of the office for the rest of the afternoon. Would it be okay if I send an e-mail later this afternoon?"

"Yes," he says. "That would be fine, but I want some research to support the information, too. Would you be able to send me a report about this by the end of this week?"

"Sure," you say. "I've already done some of the research, so that deadline is doable."

"Oh good," he says. "I appreciate your help!"