An automobile dealership offers to fill the four tires of your new car with 100% nitrogen for a cost of $20. The dealership claims that nitrogen-filled tires run cooler than those filled with compressed air, and they advertise that nitrogen extends tire mileage (life) by 25%. If new tires cost $50 each and are guaranteed to get 50,000 miles (filled with air) before they require replacement, is the dealership’s offer a good deal?

An automobile dealership offers to fill the four tires of your new car with 100% nitrogen for a cost of $20. The dealership claims that nitrogen-filled tires run cooler than those filled with compressed air, and they advertise that nitrogen extends tire mileage (life) by 25%. If new tires cost $50 each and are guaranteed to get 50,000 miles (filled with air) before they require replacement, is the dealership’s offer a good deal?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 4.4IP

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