Figure 11A.1
-Refer to Figure 11A.1 above. After the firms that produce cars and engines merge,
A) more engines and cars are produced, and the price of cars is higher.
B) less engines and cars are produced, and the price of cars is lower.
C) more engines and cars are produced, and the price of cars is lower.
D) less engines and cars are produced, and the price of cars is higher.

Question

Figure 11A.1
-Refer to Figure 11A.1 above. After the firms that produce cars and engines merge,
A) more engines and cars are produced, and the price of cars is higher. 
B) less engines and cars are produced, and the price of cars is lower. 
C) more engines and cars are produced, and the price of cars is lower. 
D) less engines and cars are produced, and the price of cars is higher.

Quizplus · Accepted Answer

When the firms that produce cars and engines merge, they can benefit from the economies of scale and reduce their costs of production. As a result, they can produce more cars and engines at a lower cost, which enables them to lower the price of cars and sell more of them. Therefore, more engines and cars are produced, and the price of cars is lower.

Figure 11A.1 -Refer to Figure 11A.1 Above. After the Firms That Produce