Assignment Content
Competencies
Analyze microeconomics and macroeconomic concepts.
Interpret supply and demand curves and market equilibrium.
Calculate cross price elasticity of demand, utility, and productivity.
Interpret production costs and cost curves.
Apply knowledge of market structures to firms, consumers, and public policies.
Calculate profits and profit maximization for optimal price and output.
Student Success Criteria
View the grading rubric for this deliverable by selecting the “This item is graded with a rubric” link, which is located in the Details & Information pane.
Scenario
As an economic consultant at Lightning Volt Automotive, leadership has asked you to submit a proposal to the board and investment group on how to increase production domestically to expand exports in the near future. The goal of the proposal is to secure funding from the investors.
The board and the investors want to see:
Concepts of the production possibilities curve (PPC)
Factors of production
Type of good
Supply and demand
Cross-price elasticity of demand of gasoline driven vehicles
Production costs
Profit maximizations
Optimal level of production
Impacts the public policies on the electric vehicle industry in the United States
Address the following in a PowerPoint presentation. Use speaker notes to add details to each slide. Be sure to cite your sources in APA format and include a reference page.
Use the Excel spreadsheet linked here to complete the calculations and charts, then copy and paste them into the slides. You only need to submit your PowerPoint presentation.
1. Identify the type of good that Lightning Volt Automotive produces. Explain how the factors of production will determine the point on Lightning Volt’s PPC. Identify four ways Lightning Volt Automotive could reach an unattainable point on the PPC.
Include an explanation of expected changes to supply and demand from economic externalities such as availability of electricity, recharging stations, tax rebates to consumers, tax credits to U.S. union-produced electric vehicles, and the change in equilibrium price and quantity.
2. Explain the type of market structure Lightning Volt Automotive operates in, along with four characteristics of the market structures. Identify Lightning Volt Automotive advantage at a national level. Describe Lightning Volt’s pricing schedule and explain the optimal production level based on the information presented in the Excel spreadsheet.
Include a calculation of the cross-price elasticity of the gasoline driven vehicles and electric vehicles. If the price of electric vehicles increases from $45,000 to $62,000, and the quantity demanded for gasoline driven vehicles increases in demand by 10%, explain if these goods are complementary goods, substitute goods, or non-related goods. If there is a relationship,
indicate whether it is weak or strong. Justify your answer with an explanation based on the elasticity figure.
3. Create the total cost curves and the marginal and average cost curves in the spreadsheet. On the average and marginal cost curves, identify and explain the point where profits are maximized as well as the breakeven points for Lightning Volt Automotive.
4. Explain the impacts of public policies.
How would the policies strengthen or weaken the affordability of electric vehicles?
How would the policies affect the incentive provided to domestic consumers and producers?
Explain why an investment in Lightning Volt Automotive would be wise to generate lucrative returns.
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