You're surprised to learn that instead of $1,100 a 1 horsepower engine costs $1,400. What could explain this? The manufacturer is trying to be more price competitive at 1 HP to sell more 1 HP engines. There is a fixed cost that the manufacturer must recoup to justify producing a 1 HP engine. The technology in the 1 HP engine benefits from trickle down knowledge from investment in higher HP engines, making it cheaper to produce than expected. Sophisticated high HP engines make them relatively more expensive than the 1 HP engine