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QUESTION
Tesla. You've been hired by the president of Tesla to provide some economic analysis of responses to a recent fire in their electric car.
- The article talks about Chevrolet and its electric vehicle, the Volt. Suppose Tesla and Chevy behave as firms engaging in monopolistic competition. Briefly describe the concept of monopolistic competition, and what factors lead to that type of competition. Based on the fact that Teslas sell for about $70K and Volts about $40K, do you think this is a case of monopolistic competition? If it isn’t, then describe some of the steps Chevy could take to compete with Tesla.
