Suppose Toyota and Honda must decide whether to make a new breed of side-impact

Question

Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard equipment on all models. Side-impact airbags raise the price of each automobile by $1,000. If both firms make side-impact airbags standard equipment, each company will earn profits of $2 billion. If neither company adopts the side-impact airbag technology, each company will earn $3 billion. If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $4 billion and the other company will earn $-1 billion. If you were a decision maker at Honda, would you make side-impact airbags standard equipment? No. There is not enough information to answer the question. Yes. If Toyota and Honda were able to cooperate, would you expect this same outcome? Yes. There is not enough information to answer the question. No.

Explanation / Answer

The correct answer is Yes. The decision making at Honda the make an impact airbags standard equipment is required. It would enhabce the efficiency of the vehicle in terms of safety point of view.

The correct answer is Yes. The joint venture of Honda and oyota would show good results in the outcomes. The sales would have increased in the market.

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