Econ 705 Module 1 Assignment

1.The process for buying a car in the U.S. seems to usually exhibit the following characteristics (it may differ from these, but I'm not an expert in the auto industry so just take these as given for the sake of argument):

a.A car dealership purchases cars from a manufacturer at a specific wholesale price, set by the manufacturer.

b.The car dealership puts a sticker in the car window which includes the MSRP, or manufacturer suggested retail price.

c.The car dealership negotiates the actual selling (retail) price with individual customers, such that the same car may sell for different retail prices for different customers.