Microeconomics - Global Automobile Industry

Running head: MICROECONOMICS
Microeconomics
Name of the student
Name of the university
Author’s note

MICROECONOMICS1
Table of Contents
Answer IV- a....................................................................................................................................2
Answer IV-b....................................................................................................................................2
Answer V-a......................................................................................................................................2
Answer V-b......................................................................................................................................3
Answer V-c......................................................................................................................................3
Answer VI-a.....................................................................................................................................3
Answer VI-b....................................................................................................................................3
Answer VI-c.....................................................................................................................................4
References........................................................................................................................................5

MICROECONOMICS2
Answer IV- a
Ford motors has variable cost such as cost of steel inputs, cost of raw materials such as spare
parts and components, labour cost in the short run. The company produce large number of
vehicles at the same time as it has greater economies of scale. This helps the company to
distribute its variable cost over large produced units. This helps the company to earn huge
revenue and profit.
Answer IV-b
The variable cost influences the output of the company. In ford motors, the variable cost includes
the expenses related to wages, duties, warranty costs and freight expenses. An increase the
variable cost increases the output. Therefore if company wants to increase the number of units
produced, then it must increase the variable cost. It will reduce the cost of rent of each vehicle.
The fixed cost do not directly affect the volume of output for a defined period. The fixed
expenses in ford motors includes cost of rent, furniture and equipment (Hashmi & Biesebroeck,
2016).
Answer V-a
The most consistent competitors of FORD are general motors company, Tesla Inc and Paccar
Inc.