What price should you charge for a midsized automobile

Reference no: EM13190145

You are the owner of a local Honda dealership. unlike other dealerships in the area, you take pride in your no haggle sales polict. Last year, your dealership earned record profits of $1.5 million. However, according to the local Chamber of Commerce, your earnings were 10 percent less than either of your competitors. In your market, the price elasticity of demand for midsized Honda automobiles is -4.5. In each of the last five years, your dealership has sold more midsized automobiles than any other Honda dealership in the nation. This entitled your dealership to an additional 30 percent off the manufacturere's suggested retail price (MSRP) in each year. Taking this info into account, your marginal cost of a midsized automobile is $11,000. What price should you charge for a midsized automobile if you expect to maintain your record sales?

Reference no: EM13190145

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