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Question: A producer of synthetic motor oil for automobiles and light trucks has made the following statement: "One quart of Dyno lube added to your next oil change will increase fuel mileage by one percent. This one-time additive will improve your fuel mileage over 50,000 miles of driving."
a. Assume the company's claim is correct. How much money will be saved by adding one quart of Dyno lube if gasoline costs $4.00 per gallon and your car averages 20 miles per gallon without the Dyno lube?
b. If a quart of Dyno lube sells for $19.95, would you use this product in your automobile?
In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to lower price
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