a. Did Michelle act ethically in her dealings with Michael?

b. What could Michael have done to avoid some of the problems that he had incurred?

c. Use the concepts of opportunity cost and SMART goal planning to explain how Michael could have made a better financial decision.

Michael loves cars. His favourite car is the Subaru WRX STI. Recently, Michael saw a sales ad for his dream car. The price seemed too good to be true, so Michael decided to contact the seller to see if he could take it for a test drive. 

After test driving the car and negotiating the price, Michael decided that this was a once-in-a-lifetime opportunity to purchase a vehicle that he had always dreamed of owning. The owner of the car, Michelle, had informed Michael that the car needed some work but that it seemed to be mechanically sound. Michael agreed that the car did run well and otherwise appeared to be in good shape. After agreeing upon a price, Michael purchased the Subaru from Michelle.

A few months later, Michael started to notice some minor problems with the vehicle. Although he was able to financially afford to pay for these repairs, he was starting to get nervous because he found that he was quickly using up money that he had set aside for his goal of attending college full-time. In fact, Michael had already decided to drop one class so that he could pick up some extra shifts at work in order to pay for some of the vehicle problems he was having.

The following semester, Michael decided that he could no longer afford to make repairs to his Subaru. He decided to sell the car for $3000 less than what he had paid for it! To make matters worse, Michael’s vehicle expenses forced him to reduce the number of courses he was taking at college. He was now a part-time student.