Study guide ex: You are the owner of a local Honda dealership. Unlike other dealerships in the area, you take pride in your "no-haggle" sales policy. Last year, your

dealership earned record profits of $1.5 million. In your market, you compete

against two other dealers, and the market-level price elasticity of demand for

midsized Honda automobiles is 1.3. In each of the last five years, your

dealership has sold more midsized automobiles than any other Honda

dealership in the nation. This entitled your dealership to an additional 30

percent off the manufacturer's suggested retail price (MSRP) in each year.

Taking this into account, your marginal cost of a midsized automobile is

$12,000. What price should you charge for a midsized automobile if you

expect to maintain your record profits?