Final answer:
The car dealership market is competitive due to the presence of thousands of dealers and international competition. Formerly dominant U.S. carmakers now share the market with global companies, leading to more innovation and choice for consumers. The integration of economies of scale with international trade enhances competition and consumer variety. The correct answer is option: a)There are thousands of car dealerships that serve millions of consumers each year.
Step-by-step explanation:
The question pertains to whether the market for car dealerships is competitive. In a scenario where there are thousands of car dealerships catering to millions of consumers, the market appears to be competitive. This competitiveness is further underscored when considering the effects of globalization which has shifted market boundaries beyond the national level, bringing international competition into the U.S. automobile market.
In the past, U.S. carmakers such as General Motors, Ford, and Chrysler had a large share of the market, but now face strong competition from global companies like Toyota, Honda, and Volkswagen. This has led to benefits such as increased innovation and better responsiveness to consumer needs due to the competitive pressure from international car manufacturers. The concept of economies of scale is relevant here as it allows for production at a lower average cost while maintaining variety and competitiveness through international trade.