Chapter 2: Value Creation
Miracle Shield Auto Finish
Miracle Shield Auto Finish is the best car polish and paint protection available anywhere. It is a
substitute for wax, but it protects and maintains the shine of a car’s finish at least 20% longer
than regular car wax. It is sold in a bottle that is adequate for one application to one car. Regular
wax, which is sold in a container that is enough for two applications, costs about $4.00/container.
Miracle Shield, however, is that it both removes the oxidation and shines the car’s surface in one
step. Consequently, Miracle Shield can be applied directly to a car’s surface that is already
highly oxidized.
a) Making any reasonable assumptions that you need to make, estimate the economic value
of Miracle Shield. (You may assume that Miracle Shield is the only alternative to car wax
available in this market. You may assume a labor cost of a person’s leisure time who
waxes his/her own car. Ignore the time value of money.)