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 curve that shows the relationship between net exports and the real exchange rate is:
A) upward sloping. B) horizontal. C) downward sloping. D) vertical.
Based on the data in the table above, at the short-run equilibrium
A) the unemployment rate is less than the natural unemployment rate. B) the unemployment rate is greater than the natural unemployment rate. C) the money wage rate will rise in the long run. D) the economy is at full employment.
A monopoly or group of firms acting together as a monopoly
a. cannot perform the economic task of resource allocation b. allocates resources in the most efficient way possible c. misallocates resources by producing more output than a competitive industry would d. misallocates resources by producing where the marginal benefit of the final unit produced exceeds its marginal cost e. misallocates resources by producing where the marginal benefit of the final unit produced is less than its marginal cost
Distinguish between cost-of-service regulation and rate-of return regulation. What problem is inherent in both types of regulation?
What will be an ideal response?