Question: Hi I was confused about this question: From 2000 until 2013, GM sold cars in the U.S. and Canada for $15,000 and sold 900,000 cars
Hi I was confused about this question: From 2000 until 2013, GM sold cars in the U.S. and Canada for $15,000 and sold 900,000 cars in the U.S. and 100,000 cars in Canada each year.In 2014 GM decided that it could maximize its profits by selling cars for $16,000 in the U.S. and $13,000 in Canada and by voiding warranties to prevent cars sold in Canada from being resold in the U.S.In 2014, GM continued to sell a total of 1 million cars per year, its revenues were higher than in 2000-2013, and its costs were the same as in 2000-2013, exactly as GM had predicted. Is there enough information above to tell whether total surplus from GM cars went up or down in 2014? What about consumer surplus? Explain. (When considering these surpluses, combine the surplus in the U.S. and Canada).
I think the answer is that there is not enough information to find total surplus of consumer surplus, but I don't know what explanation to give or if that is even the right answer.
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