Worksheet C: Solutions

Name: __________________________

Using the internet, information from the video and discussions, and your prior knowledge respond to the following questions:

1. What alternatives exist to making cars on an assembly line, and what would the advantages and disadvantages be?

Elements of a Possible Solution: Volvo (today owned by Ford) has manufactured cars using a team approach. Using this approach a group of people assemble all the parts of each car. While the overall quality of Volvos is well known, the number of man-hours in building each car is much higher than for those made on an assembly line.

Evaluate each student's responses on its own merits.

2. Currently the lending rate to by a car from Ford Credit is much different than the rate to buy a home from Countrywide Home Loans. Explain why this is the case, and what it says about the car market.

Elements of Solution: In addition to lending money for profit, Ford is primarily in the business of making and selling cars. If they have an oversupply of cars in inventory, they might choose to lower the interest rate to attract new car buyers. While they would profit less from lending activities, this may be offset by higher profits in the sale of cars.

3. Early in the movie Ford paid his workers twice the hourly wage that Chevrolet did. Later his wages were the same as Chevrolet's. How would Ricardo, in his "wage theory", explain this phenomenon?

Elements of a Possible Solution: Chevrolet eventually adopted manufacturing practices that were similar to Ford's. Since the other elements of their cost structure were similar to Ford's, they ended up with lower labor costs and could sell cars cheaper than Ford. Ford was pressured, by these competitive forces, to reduce the wages of his workers.

Evaluate each students response on its own merits.