Economics 13th Edition by James Gwartney, Richard Stroup, Russell Sobel, David Macpherson

Exercise 18

If General Motors (GM) is earning losses, should the government step in to keep them in business with a taxpayer subsidy? What does the presence of losses say about how consumers value the company's output relative to its cost of production? Be sure to address the effects of the policy on GM's competitors, both domestic and foreign.