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.