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Full cost of car ownership

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How does the empirical analysis of automobile demand illustrate the fact that not only do consumers consider the monetary price of purchasing an automobile, but they also are sensitive to other costs (or the "full price") of the purchase?

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Solution Summary

An empirical analysis of automobile demand reveals that consumers consider the full price of ownership when purchasing a vehicle.

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Empirical analyses such as Winston and Mannerings (1985) demonstrate that when energy prices rise, consumers search for vehicles with better mileage. Following the energy crisis of the 1970s, smaller Japanese vehicles ...

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