Suppose you are thinking of buying a new car. One of the choices you are considering is a hybrid car. This hybrid model car is $9,000 more expensive than a traditional model; however, the hybrid model will get 40 miles per gallon of gas as compared to 30 miles per gallon for the traditional model. You expect the cost of gas to hover around $3.60 in the foreseeable future.
Given the information above and your knowledge of CVP, answer the following questions:
How would you use CVP concepts to determine which car is a better deal, making a strictly numeric decision (make sure to use CVP terminology and analysis, showing your understanding of these, in your response)?
Having conducted the analysis above, following strictly numerical parameters, which car would you buy and why?
Can you think of any non-numerical considerations that you or another prospective buyer of the hybrid model may/should consider? List as many of these as come to mind and give an opinion as to their validity/weight in the purchasing decision. Would they change your purchase decision?