1.You are in management at Superior Industries Inc., the only company in the world sells the popular consumer item widgets. A rival company makes wodgets which are a weak competitor to your product. A small consulting company with MBA students from NotUNB have written a report for Superior Industries with the important statement, "Our estimates show that the demand elasticity for widgets is elastic (-1.8 or 1.8 in absolute value) and we strongly recommend that Superior Industries lower its price to increase revenues and market share."

In one sense, their statement is correct.Explain why lowering prices increases revenues?

In another sense, their statement misses the point. Explain.

What two things might you suggest to Superior Industries to do to reduce the demand elasticity for widgets?