In Problem 15, under what conditions would GM stop producing the Chevy Volt and exit the market for electric cars. Explain your answer
What will be an ideal response?
GM will permanently shut down and exit the market in the long run if the price of a Volt is less than GM's average total cost. In this situation, if it remained open GM would incur an economic loss but if it exited the market it would no longer incur an economic loss.
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The demand curve for a particular stock at any point in time is
A) very inelastic but not infinitely so. B) almost infinitely inelastic. C) infinitely elastic. D) fairly elastic but not infinitely elastic.
Which is a distortion (a loss of social surplus) associated with a monopolist's inability to observe consumer types when constructing a nonlinear pricing scheme?
a. The monopolist must expend more resources on market research. b. All bundles involve inefficiently low quantities. c. Some but not all bundles involve inefficiently low quantities. d. Quantities aren't distorted, but prices extract too much consumer surplus.