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Please read the case study below. After you have finished reading, please complete the table and answer thequestions on the following pages.

The Peugeot 206

In early April 2008, Alex, a student at the University of Grenoble, wanted to change his car, a 206 Peugeot purchased first hand in September 2004(3 ½ years old). He has put an ad in the local papers and also posted a small note at the office where his mother is working.

Following the note posted at his mother's office, he got a call fromCaroline, a colleague of his mother at work. Caroline's daughter, Michèle, will complete her university degree in June; she has recently found a job and may need a second hand car to go to the officeearly July.

Michèle met Alex briefly this week, saw the car and was pretty excited about it.

Alex’s 206 is really in good shape with only 30 000 km and has passed the safety inspection withoutany problems; there are, however, a few dents around the car body. The 206 has no other option than the radio.

On the second hand car market, a car such as Alex’s 206 is supposed to have an averageyearly mileage of 15 000 km. The second hand car price is thus adjusted for the lower or extra mileage as follows: lower mileage - increase price by .01 euro for each km below 15 000 km per year; extramileage - reduce price by .02 euro for each additional km above 15 000 km per year; In Alex’s 206 case, the price should be increased by about 225 euros or (52 500 – 30 000) x .01 = 225.

Alex hasbeen looking for a new car for quite a while and during the last week has finally located the car he was interested in at one of the nearby dealers. He is however short of cash and unable to buy thenew car until he has sold his 206.

The dealer has seen his used car and has proposed after lengthy and heated discussions a maximum of 1700 euros for it, if he buys the new car from him. The...
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