Problem
Read the Wall Street Journal article "Tesla Cuts Prices in China as Costs Fall, Competition Heats Up" from October 24, 2022.
1. Explain why automobile manufacturers such as Tesla, General Motors and other automobile manufacturers are considered oligopolists.
2. What are economies of scale? Explain why economies of scale are a barrier to the entry of new firms into the automobile industry.
3. From the article: "Surging sales of new-energy vehicles are also driving intense competition for lithium, the key ingredient in vehicle batteries."; Could ownership of a significant source of lithium serve as an entry barrier into the market for electric vehicles?