Question
A conventional Toyota Camry has a list price of $23,070 and fuel economy ratings of 25 city/35 highway. A similar Toyota Camry Hybrid has a
A conventional Toyota Camry has a list price of $23,070 and fuel economy ratings of 25 city/35 highway. A similar Toyota Camry Hybrid has a list price of $26,790 and fuel economy ratings of 43 city/39 highway. What price of gasoline justifies the purchase of the Hybrid, using the following assumptions
- Cars are driven 50% city and 50% highway
- Cars are driven 15,000 miles a year for 11 years
- Consumers use a discount rate of 7%
- Consumers do not value the rebound effect, time savings associated with reduced refueling times, or performance differences between conventional and Hybrid cars.
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