The Government Expectations Through The Cafe Standards On Consumer Cost Benefit Analysis On Purchasing An Eco Environmentally Car

2196 WordsOct 13, 20169 Pages
The government expectations through the CAFE standards on consumer cost benefit analysis on purchasing an eco-friendlier car is not realistic to what consumers truly value. If this were the case, then why wouldn’t everyone be purchasing a more economical vehicle? The problem with these governmental standards is that they do not efficiently satisfy the needs of both the consumers and manufacturers within the automobile industry. Although the data suggests that the net benefits certainly outweigh the costs in the long run, what is not seen are the costs incurred to manufacturers over time. Using the economic theories of the Keynesian Model, from “That which is seen, and that which is not seen”, and supply and demand, we will discuss the implications of these imposed standards and suggest our own recommendations for solving this problem. Supply and demand is the most basic principle of economics. Supply and demand have an inverse relationship to each other for very simple reasons. When demand increases, people buy more of an item, thus lowering supply. If supply increases, then items demand of an item is decreased unless the price is lowered. The way that this case is affected by supply and demand is when the CAFÉ standards are enacted the price of vehicles will go up due to the increased costs of production. The increase in the price will lower the demand of new cars and increase the supply sitting in dealerships. Also the increase in price of new fuel efficient

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