Hi sir/miss/madam, I would like to seek help and explaination regarding this topic. I need to revise since I will have final exam soon. Thank you sir/miss/madam.

QUESTION 1 (20 marks)

Company A designed a subcompact, the model P, which weighed less than 1000kg and sold for less than $2,000. Anxious to compete with foreign-made subcompacts, Company A brought the car into production in slightly more than 2 years (shorter 1 years from usual practices). Given this shorter time frame, styling preceded much of the engineering, thus restricting engineering design more than usual. As a result, it was decided that the best place for the gas tank was between the rear axle and the bumper. The differential housing had exposed bolt heads that could puncture the gas tank if the tank were driven forward against them upon rear impact.

Company A also tested rear impact when rubber bladders were installed in the tank, as well as when the tank was located above rather than behind the rear axle. Both passed the required rear impact tests. Although the federal government was pressing to stiffen regulations on gas tank designs, Company A contended that the model P met all applicable federal safety standards at the time. The Director of Automotive Safety for Company A, issued a study titled " Fatalities Associated with Crash Induced Fuel Leakage and Fires". This study claimed that the costs of improving the design ($11 per vehicle) outweighed its social benefits. A memorandum attached to the report described the costs and benefits as follows:

Benefits Savings 180 burn deaths, 180 seriuos burn injuries, 2100 burned vehicles Unit Cost $ 200,000 per death, $67,000 per injury, & $700 per vehicle Total benefits 180 x $200,000 plus 180 x $67,000 plus 2100 x $700 = $49.15 million Costs Sales 11 million cars, 1.5 million light trucks Unit cost $11 per car, 11 per truck Total Costs 11,000,000 x $11 plus 1,500,000 x $11 = $137 million