Author Question: By 2020, automobile market analysts expect that the demand for electric autos will increase as ... (Read 82 times)

stevenposner · **on:** Jul 1, 2018

By 2020, automobile market analysts expect that the demand for electric autos will increase as buyers become more familiar with the technology.

However, the costs of producing electric autos may increase because of higher costs for inputs (e.g., rare earth elements), or they may decrease as the manufacturers learn better assembly methods (i.e., learning by doing). What is the expected impact of these changes on the equilibrium price and quantity for electric autos?
A) Unambiguously higher equilibrium price and quantity
B) Unambiguously higher price, and equilibrium quantity may be higher or lower
C) Unambiguously higher quantity, and equilibrium price may be higher or lower
D) We cannot form any unambiguous expectations for either price or quantity

Question 2

In the Stackelberg model, there is an advantage

A) to waiting until your competitor has committed herself to a particular output level before deciding on your output level.
B) to being the first competitor to commit to an output level.
C) to the firm with a dominant strategy.
D) to producing an output level which is identical to a monopolist's output level.