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In anticipation of the upcoming quarterly disclosure of profits, you prepare your Board of Directors for the pressure that cost-push inflation is having on profits. There will be some erosion of profits. Instructions For this discussion, assume the role of CEO of one of the following hypothetical company: All America Grocery Inc. We serve communities in the middle of the income market, providing low prices for all basic grocery needs. Our modest-income consumers expect good deals on good quality foods. The Covid-19 pandemic has put upward pressure on the price of everything we sell. Cost-push inflation from multiple sources is impacting our operating cost and our cost of goods. We are both fortunate and unfortunate that the price elasticity of demand for food is .20. address the following prompts within the context of your hypothetical company of which you are the CEO: Is the demand curve for your product relatively elastic, inelastic, or unitary elastic? Demonstrate this for your company’s product by how much the quantity demanded will change if you pass on the 10% increase in cost. In other words, prepare a forecast showing by what percentage the quantity demanded will change if your prices are raised by 10%. You must provide calculations showing the percentage change in quantity demanded. Will you pass on most or all of the cost increase to your customers? Why or why not? *************** Provide your opinion of the following analysis: Big Time Entertainment. Big Time Entertainment is a nationwide firm providing movies, concerts, arcades, and other in-person entertainment venues such as bowling and roller skating. Our operations have been heavily impacted during the Covid-19 pandemic, including co​‌‍‍‍‌‍‍‍‌‍‍‍‌‌‌‌‌‌‍‍​ntinuing limits on number of guests and new costs associated with safety measures for both staff and customers. We are now reopening but facing a continued cost-push inflation. We also face uncertainty as to the potential for additional shutdowns. Customers are fearful, and the guidance on operating our facilities means we are operating far below our optimal number of patrons to cover the higher cost of everything. Price elasticity of demand is 1.6, and we are also faced with competition from online entertainment and gaming, which are not experiencing many of these cost pressures. The demand curve for Big Time Entertainment will be elastic because as product costs increases the prices increase which as well will create a reduction in demand. Big Time Entertainment operations have been severely impacted by the COVID pandemic. As the CEO we are preparing for the challenges of cost-push inflation is having on our competitive ability in the entertainment market. Our online competitors are formidable Opponents as they do not have our upward trend in costs. The price elasticity of demand is 1.6. For these reasons we are analyzing, evaluation and comprising the best strategic cost analysis for elasticity as well as profit margin. Using the 1.6 price elasticity, a 1% increase would create a change in demand of 1.6% A 10% change in price would be 16 % (.10 x 1.6 =16 = 16%) Due to the sensitivity of price increases to our customers and our online competitors who can offer identical or similar services to customers at reduced rates an from the comfort of their own home It would be more beneficial to our profit margin strategy to lower costs as this would be most advantageous to our corporation in the long run​‌‍‍‍‌‍‍‍‌‍‍‍‌‌‌‌‌‌‍‍​.