Admiral Motors Is the Dominant Firm in the Auto Market

question 310

True/False

Admiral Motors is the dominant firm in the auto market. When Admiral announces an increase in the prices of its automobiles, Chord and Frysler, the smaller firms in the market usually quickly announce similar price increases for their own cars. This situation is an example of demand-oriented pricing.

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Definitions:

Equilibrium Quantity

The quantity of goods supplied is equal to the quantity demanded at a given price level.

Equilibrium Price

The price at which the quantity of a good supplied equals the quantity demanded, resulting in no surplus or shortage in the market.

Zero Economic Profit

A situation where a firm's total revenues exactly equal its total costs, indicating no above-normal profit.

Economist

A professional or expert in economics, studying the production, distribution, and consumption of goods and services.