Applicable VLOs for This Week's Case Study 11. Articulate various economic principles and their relationship to business. This Week's Detailed Case Study Information When you wake up in the morning the first thing you do is read the news on your phone. Over the past few weeks, you notice there has been a lot of talk about an economic downturn and experts are saying that we are approaching the decline phase, which will lead to a recession. The economic environment has a profound effect on all types of businesses. Economic cycles affect revenues and profits, while product elasticity affects pricing and demand. Other economic principles could also have substantial effects on business. This week you will help Brian and Dev articulate various economic principles and their relationship to Diamond Hands' business Diamond Hands receives a large share of their annual revenue from the sale of new gaming equipment. Stock is comprised of the following: Most of Diamond Hands sales are higher end equipment. Customers trust the DH warranty, and also the expertise of the DH staff when recommending gaming gear. Diamond Hands makes the most profit off higher end gear. Deliverables for This Week's Case Study Brian and Dev are wondering what should be done in order to weather the upcoming recession, which seems likely, and keep Diamond Hands' finances in as good a shape as possible. - Classify the inventory according to product type: "Normal good, Luxury good, or Inferior good" - Draw the current aggregate demand/ supply curve for the gaming industry and show what will happen to demand/supply if there is an economic downturn. (Note: there is no need in collecting actual data, and performing statistical analysis or forecasting) - State the relationship between the economic cycle and expected sales of each good type (Normal, Luxury, or Inferior) - Recommend an action plan for Diamond Hands to weather the recession. Be specific to their store, and their industry. Be sure and discuss any inventory changes, how to maximize cash flows and ideas to increase sales if possible