Chapter 7: Production, Firms & Market

Chapter 7:

Production, Firms

& Market

‘We’re going to electrify the F-Series,’ Ford executive says

January 18, 2019

Ford Motor Co. confirmed plans to build a fully electric F-Series pickup, a very capital-intensive production decision. These plans are in reaction to Tesla’s (who has developed a mini-monopoly, dominating the market for luxury all-electric cars) announcement to produce an electric pickup -- an attempt at product differentiation. Thus, creating an alternative to the combustion engine is crucial if Ford plans to protect its pickup franchise. Ford is confident that though variable costs will rise, it believes that its product strength will continue to allow it to be a bestseller.

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Ford F-150 trucks come off the assembly line at the Ford Rouge Plant in Dearborn on Sept. 27, 2018.

Glossary

1. Capital-Intensive

Production in which machinery rather than labour dominates the process, characteristic of the factory system.

2. Monopoly

A market structure in which one firm has complete control over supply, allowing it to set a profit-maximizing price.

3. Product Differentiation

The attempt by competing firms to distinguish their product in some desirable way from that of their competitors in order to gain greater control over price.

Chapter 7:

Production, Firms

& Market

‘We’re going to electrify the F-Series,’ Ford executive says

January 18, 2019

1. Capital-Intensive

Production in which machinery rather than labour dominates the process, characteristic of the factory system.

2. Monopoly

A market structure in which one firm has complete control over supply, allowing it to set a profit-maximizing price.

3. Product Differentiation

The attempt by competing firms to distinguish their product in some desirable way from that of their competitors in order to gain greater control over price.

4.Variable Costs

Costs that change or vary with the level of output, such as labour or raw materials.

Chapter 7:

Production, Firms

& Market

‘We’re going to electrify the F-Series,’ Ford executive says

January 18, 2019

1. Capital-Intensive

​

Production in which machinery rather than labour dominates the process, characteristic of the factory system.

​

2. Monopoly

​

A market structure in which one firm has complete control over supply, allowing it to set a profit-maximizing price.

​

​

3. Product Differentiation

​

The attempt by competing firms to distinguish their product in some desirable way from that of their competitors in order to gain greater control over price.

​

4.Variable Costs

​

Costs that change or vary with the level of output, such as labour or raw materials.