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In a particular region, there are two car manufacturers, Neptune and CNX. Neptune does not currently sell electric cars but CNX does. The research and
In a particular region, there are two car manufacturers, "Neptune" and "CNX." Neptune does not currently sell electric cars but CNX does. The research and development team at Neptune believes it could develop and sell electric cars at an average cost of $25,000, of which $24,000 is variable costs. Currently CNX sells their electric cars at a price of $38,000. The management team at Neptune estimates that CNX has average costs of $26,000, of which $23,000 is variable. Should Neptune develop their own electric car? Neptune should definitely not develop the electric car since its average cost is greater than CNX's variable cost. Neptune should definitely develop the electric car since its average cost is lower than CNX's average cost. Neptune should develop the electric car if customers will be willing to pay at least $1,000 more for their electric car than for CNX's electric car. Neptune should develop the electric car if customers will be willing to pay at least $2,000 more for their electric car than for CNX's electric car
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