Phase 2 Discussion Board Assignment Example | Topics and Well Written Essays - 750 words - 1

Phase 2 Discussion Board - Assignment Example Therefore, the demand is inelastic, meaning that a change in price would not significantly affect the quantity demanded. When elasticity of demand is referred to as unitary, this means it equals one and as such, any change in price will have an equal impact on quantity demanded. Price elasticity of demand (PED) refers to change in quantity demanded due to percentage change in price. The value of price elasticity is similar at all points along the demand horizontal curve. The same case applies to price inelastic demand (PID) which is represented by a vertical line. According to Gupta (2008), PED is defined as a measure of responsiveness of quantity demanded to changes in price. Demand is said to be elastic when PED is greater than one. Further, this indicates that consumers are very sensitive to changes in price. One percentage change in price will lead to a drop in quantity demanded by more than one percentage. Similarly, when PED is less than one, it is interpreted that consumers are insensitive to price changes and any increase in price will cause a decline in quantity demanded by less than one percentage. Ideally, the effect of price increase has a significant effect on Autoedge total revenue. As such, PED becomes paramount for the company as it seeks to maximize revenues. In this regard, if Autoedge finds its PED to be relatively inelastic, it may decide to raise prices since the auto parts would be sold at high prices without adversely affecting sales. Similarly, if Autoedge finds its PED to be inelastic, it may choose to lower prices in order to enable the business increase the number of units sold and hence revenue without necessarily losing customers. It is worth noting that when demand is perfectly elastic as represented by a horizontal curve, any increase in price leads to zero units demanded. On the other hand, if the demand is found to be perfectly

Who are the nations who threaten our, Americas, standing in the world Research Paper

Who are the nations who threaten our, Americas, standing in the world market place - Research Paper Example While the United States is still the largest economy in the world, it faces challenges from global competitors. China, Japan, India and Germany are all countries that have gained ground on the United States in recent years and continue to do so. China, in particular, has proved to be a looming threat. It pulled out of the global recession much sooner than did the United States, due to a myriad of factors. Moreover, the people of China still lag behind the rest of the world in terms of wealth, therefore China is reliant upon the world market for its growth. This is the reason why China has carried an enormous trade balance with the United States. Japan, once a large threat, is now much less of one, as China has surpassed it in recent months in terms of the size of the economy, and Japan continues to have troubles due to the recent disasters. India is growing as well, and, like China, has a problem in that its citizenry is not as prosperous as more developed countries. Germany, meanwhi le, probably presents the least threat of all the countries examined here, as it has grown in recent months, but this growth has been driven by its domestic sector, not the world market. China While the United States and most of the world remain mired in the worst economic slowdown in decades, China remains relatively unscathed. In fact, it posted a gross domestic product growth rate of 7.1% for the first half of 2009, and its economy expanded by 10% in 2010 (â€Å"China Economy Hums Along as U.S. Remains Mired in Recession†). ... overseas investments (Ford), and the fact that Chinese banks are controlled by the Chinese government, which eases the flow of lending (â€Å"China Economy Hums Along as U.S. Remains Mired in Recession†). However, one of the most important factors that sets China apart is its economic stimulus plan (Reyes), that was more successful than the U.S.'s similar stimulus plan, in large part because China did not have the existing debt that the United States did prior to enacting the stimulus plan (Lau). The example set by the Chinese might be able to be emulated by the United States and other countries, however, since China has a unique set of circumstances, it is improbable that other countries can duplicate its success. At any rate, China seems poised to bring the rest of the world out of recession, when, in prior recessions, the United States has led the way (Schwartz). The great untapped potential in Chinese domestic consumption are the rural areas, whose consumption lag behind u rban areas by 10 years (Reyes). This, in large part, is because of the great income disparity between the two sectors, and because rural residents are compelled to save because of the current lack of a reliable social security system and the fact that over 99% of rural residents do not have health insurance (Reyes). China's contributions to insurance and pensions should therefore help in increasing the ability of the rural residents to consume. This increase in consumption will, in turn, offset the decrease in exports and presumably make China less dependent on the export market, thereby stabilizing China's economy (Reyes). Indeed, China is currently entering a period where they are poised to increase their consumption levels substantially, purchasing their first automobiles and first commercially