Volkswagen to Cut Jobs and Close Factories

Volkswagen is preparing to cut as many as 100,000 jobs over the coming years and close four factories in Germany.—ft.com

Last year, Volkswagen produced and sold approximately 8.98 million vehicles worldwide. The company is adjusting its production capacity to build 500,000 fewer cars at its European factories.—wsj.com

In China, the expected launch of many new electric vehicles by Chinese manufacturers caused Volkswagen’s electric vehicle deliveries to fall by 64%.—wsj.com, April 13, 2026

Volkswagen operates 111 production facilities across 26 countries.—www.volkswagen-group.com

Answer the following questions to check your understanding of the story.

How have Chinese automakers influenced the market for Volkswagen cars?

a) Demand for Volkswagen cars has increased.

b) Supply of Volkswagen cars has increased.

c) Demand for Volkswagen cars has decreased.

d) Supply of Volkswagen cars has decreased.

How has increased competition from Chinese automakers influenced Volkswagen’s profit-maximizing quantity of output?

The demand and marginal revenue curve have shifted _________, so the marginal cost curve intersects the marginal revenue curve at a _________ quantity of output.

a) leftward; lower

b) leftward; higher

c) rightward; higher

d) rightward; lower

Why has Volkswagen chosen to close four plants?

Volkswagen won’t continue with 111 plants because the ________ fixed cost would be spread over _________, raising average total cost.

a) same; higher output

b) lower; higher output

c) same; lower output

d) higher; lower output

How would Volkswagen’s costs change if it chooses to operate with 107 plants?

a) Fixed cost, variable cost, and total cost decrease.

b) Fixed cost decreases but variable cost and total cost increase.

c) Fixed cost, variable cost, and total cost increase.

d) Variable cost decreases but fixed cost and total cost increase.

Is Volkswagen’s decision to close plants and lay off workers correct?

_________, because Volkswagen produces the new profit-maximizing quantity at a ________ average total cost using 107 plants rather than 111 plants.

a) No; lower

b) Yes; higher

c) Yes; lower

d) No; higher

Has Volkswagen made a short-run decision or a long-run decision by announcing the closure of plants and layoffs of workers?

Volkswagen has made a ___________ decision because ____________.

a) short-run; quantity of capital can change only in the short run.

b) short-run; quantity of labor can change only in the short run.

c) long-run; quantity of capital can change only in the long run.

d) long-run; quantity of labor can change only in the long run.

Volkswagen to Cut Jobs and Close Factories

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