Consumer Valuationsfor Two Versions ofthe Honda PilotConsumer TypeHondaPilot 4WD 4WDLXHonda PilotTouring$37,000$44,000Highly price-sensitive $32,000Less price-sensitiveHonda plans on pricing the 4WD LX at$30,000 and the Touring model at $40,000. Isthis pricing structure incentive compatible?How much would Honda get from selling totwo customers-one of each type?A. Yes; $70,000.B. No; $70,000.C. Yes; $76,000.D. There's not enough information to be ableto determine the answer.E. No; $60,000.Suppose that the Touring model costs just$1000 more to produce than the 4WD LX.How much can Honda raise the price on theTouring model (keeping the price on the 4WDLX unchanged) without reducing profit?A. $599.99.B. $999.99.C. $1499.99.D. $499.99.E. $0.$33,500

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Consumer Valuations for Two Versions of the Honda Pilot Consumer Type Honda Pilot 4WD 4WD LX Highly price-sensitive $32,000 $37,000 Honda Pilot Touring Lecs price-sensitive $33 500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consumer Valuations
for Two Versions of
the Honda Pilot
Consumer Type
Honda
Pilot 4WD 4WD
LX
Honda Pilot
Touring
$37,000
$44,000
Highly price-sensitive $32,000
Less price-sensitive
Honda plans on pricing the 4WD LX at
$30,000 and the Touring model at $40,000. Is
this pricing structure incentive compatible?
How much would Honda get from selling to
two customers-one of each type?
A. Yes; $70,000.
B. No; $70,000.
C. Yes; $76,000.
D. There's not enough information to be able
to determine the answer.
E. No; $60,000.
Suppose that the Touring model costs just
$1000 more to produce than the 4WD LX.
How much can Honda raise the price on the
Touring model (keeping the price on the 4WD
LX unchanged) without reducing profit?
A. $599.99.
B. $999.99.
C. $1499.99.
D. $499.99.
E. $0.
$33,500

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