Question

If U.S. auto manufacturers cut the prices of their vehicles to sell a greater quantity, buyers may assume that the lower price implies _____________ compared to foreign manufactured vehicles.

Answer 1

Answer: Lower quality

Explanation: U.S auto industry comes under the oligopoly market structure with small number of sellers operating at very large scale. In an oligopoly market structure, the firms in the industry compete on the basis of advertising, product differentiation etc. and not on price.

If US auto manufacturers do so, buyers will surely assume that the quality of product offered is lower than others.