Multiple choice

The new Altis Delight, Altis Auto’s flagship electric-gas hybrid automobile, is considered so efficient by Altis that the company plans to sell the Delight to consumers for no payment other than the difference between what the consumer paid for gasoline for the past three years of driving their previous vehicle and what they will pay for gasoline while driving the Delight for the next three years. Consumers will make an initial down payment, and then pay any remaining fees after fuel costs have been assessed at the end of the three year period.

Which of the following, if true, would most significantly disadvantage Altis Auto based on their proposed payment system?

  1. Most drivers own only one automobile.

  2. Other car manufacturers are planning to introduce similar fuel-efficient vehicles.

  3. Drivers interested in the Delight tend to drive significantly more miles annually than the average driver.

  4. The price of gasoline is expected to rise dramatically over the next three years.

  5. The annual amount spent on gasoline by drivers can be accurately determined based on the number of miles driven in a specific make of automobile.
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D Correct answer
Explanation

(1) Most drivers own only one automobile.

If is is assumed that drivers own only one automobile, then it could be either Altis Delight or any other brand. Either ways there won’t be any disadvantage for Altis Auto. If they own some other brand, then there is no question of this payment plan and if the drivers own Altis Delight, then the payment plan is applicable, which could be well thought of.
(2) Other car manufacturers are planning to introduce similar fuel-efficient vehicles.
Altis Delight is already purchased, so competitor is not a problem.
(3) Drivers interested in the Delight tend to drive significantly more miles annually than the average driver.
The payment is structured around the price differential of gasoline and the price incurred on this car. So distance has no bearing on the payment system to disadvantage Altis Auto.
(4) The price of gasoline is expected to rise dramatically over the next three years.
If the price of gasoline increases, then the savings would deplete and Altis Auto will receive significantly less payment, which is a disadvantage.
(5) The annual amount spent on gasoline by drivers can be accurately determined based on the number of miles driven in a specific make of automobile. Number of miles has no bearing on the savings. So this doesn’t disadvantage Altis Auto.

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