You are the CEO of the below hypothetical company. Using the information below, answer the following questions. Is the demand curve for your product relatively elastic, inelastic or unitary elastic? Demonstrate for your company's product by how much the quantity demanded will change if you pass on a 10% increase in cost. In other words, show your calculation of the percentage change in the quantity demanded if your prices are raised by 10%.You must provide a calculation showing the percentage change in quantity demanded.

Given your company's price elasticity of demand and the industry supply/competitive environment, you face create a statement for your board as to the potential impact on profits. Who will pay the larger share of the cost increases, your firm or your customers?

Very Big US Auto- Very Big US Auto is one of the oldest and one of the largest auto manufacturers of autos in the US. Very Big US Auto's supply chain is highly dependent on components manufactured in China and assembled in the US. The Chinese have rebounded quickly; much of the production capacity is still going to rebuild inventories, so the supply of components still lags behind demand. Additionally, manufacturing facilities like ours must take extra precautions to keep workers safe. Costs are rising on all aspects of production across the industry. Given these supply-side factors, we know that the supply of auto is relatively inelastic. On the demand side, Very Big US Auto knows that demand is relatively elastic with a price elasticity of demand of 1.2. But we also know that pandemic has made some transportation substitutes less acceptable.