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During the summer of 2011, General Motors (GM) had trouble selling pickup trucks. According to an article in USA Today : General Motors dealers had a 122-day supply of Chevrolet Silverado and GMC Sierra pickups in June, more than 50% above what’s considered optimum…Behind the glut: The year started strong and makers pumped up production. Then the economy slowed faster than they cut back.
a. What does a glut imply about the quantity demanded of GM pickup trucks relative to the quantity supplied?
b. Would prices of GM pickup trucks be expected to rise or fall in summer of 2011?
c. Why did the slowing economy help cause the glut of pickup trucks?
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