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Battle for market share in the automobile industry

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The following quotation appeared in a Wall Street Journal article on the battle for market share in the automobile industry in 2000: "The huge fixed cost involved in developing new vehicles and running big auto factories means automakers feel compelled to maintain-or expand-market share. Losing share long-term can mean shutting down factories or running factories at an unprofitable rate" (Warner, 2000, p. 24). Do these statements support economic theory and show that economies of scale do not benefit a firm if the output level is small? Defend your answer with a detailed evaluation that demonstrates clear, insightful critical thinking.

Reference no: EM132068361

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