As Gasoline Prices Soar, Americans Slowly Adapt As gas prices rose in March 2008, Americans drove 11 billion fewer miles than in March 2007. Realizing that prices are not going down, Americans are adapting to higher energy costs. Americans spend 3.7 percent of their disposable income on transportation fuels. How much we spend on gasoline depends on the choices we make: what car we drive, where we live, how much time we spend driving, and where we choose to go. For many people, higher energy costs mean fewer restaurant meals, deferred weekend outings with the kids, less air travel, and more time closer to home. Questions 1) List and explain the elasticities of demand that are implicitly referred to in the news clip. 2) Why, according to the news clip, is the demand for gasoline inelastic?

As Gasoline Prices Soar, Americans Slowly Adapt As gas prices rose in March 2008, Americans drove 11 billion fewer miles than in March 2007. Realizing that prices are not going down, Americans are adapting to higher energy costs. Americans spend 3.7 percent of their disposable income on transportation fuels. How much we spend on gasoline depends on the choices we make: what car we drive, where we live, how much time we spend driving, and where we choose to go. For many people, higher energy costs mean fewer restaurant meals, deferred weekend outings with the kids, less air travel, and more time closer to home. Questions 1) List and explain the elasticities of demand that are implicitly referred to in the news clip. 2) Why, according to the news clip, is the demand for gasoline inelastic?

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter1: What Economics Is About

Section: Chapter Questions

Problem 24QP

See similar textbooks

Similar questions

Solve all the Questions:- Harold lives on Doritos and seafood salads. The price of Doritos is 1 dollar per bag and the price of seafood salads is 2 dollars each. Harold allows himself to spend no more than 11 dollars a day on food. He also restricts his consumption to 6,500 calories per day. There are 1,500 calories in a bag of Doritos and 500 calories in a seafood salad. If he spends his entire money budget each day and consumes no more calories than his calo-rie limit, he can consume up to a. 5 bag of Doritos per day but no more. b. 1 bag of Doritos per day but no more. c. 4 bag of seafood salad per day but no more. d. 3 bag of Doritos per day but no more. Quincy lives on pretzels and seafood salads. The price of pretzels is 1 dollar per bag and the price of seafood salads is 2 dollars each. Quincy allows himself to spend no more than 14 dollars a day on food. He also restricts his consumption to 3,400 calories per day. There are 600 calories in a bag…
Many people think that soda consumption also leads to increased obesity. Many schools have banned the sale of soda in vending machines. Use the idea of opportunity costs to explain why some people think these bans will reduce consumption. Do you agree?
Suppose a wedge of cheese is $10, and a loaf ofbread is $5. What is the opportunity cost of purchasing a wedge of cheese (in terms of bread)?Explain what happens to the opportunity cost ofpurchasing a wedge of cheese (in terms of bread)if your income decreases by 20 percent.
Because one’s productivity in the workplace is likely to be affected by one’s health, investment in health could increase earnings to the extent that one might spend money on health care without reducing his or her consumption of other goods.
Because one’s productivity in the workplace is likely to be affected by one’s health, investment in health could increase earnings to the extent that one might spend money on health care without reducing his or her consumption of other goods. True or False
Describe several ways in which consumers are less than free in making choices about which products to purchase.
According to the principle of , consumers determine what is produced in the economy through their purchasing decisions.
You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing Question 13 options: A) the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs. B) the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs. C) the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs. D) the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs
Assume you are spending your full budget and purchasing such amounts of X and Y that the marginal utility from the last units consumed is 40 and 20 utils respectively. Assume (a) the prices of X and Y are $8 and $4 respectively; (b) it takes 3 hours to consume a unit of X and 1 hour to consume a unit of Y; and (c) your time is worth $2 per hour. In equilibrium, if you included the opportunity cost of time then, you should substitute X for Y until the marginal utility per hour is the same for both products. should consume X and Y in the equal amounts. should consume less of Y and more of X. should consume less of X and more of Y.
Need asap... My husband is sick of me drinking Coke every day. He tells me that if I give up drinking it for 6 months, he'll buy me a new car. I want a new car, so I agree to the deal, and I don't drink any Coke during that time. At the end of the six months, I tell him it's time to go get my new car. He balks and says no, explaining that not drinking Coke has actually been beneficial for me, so there's no consideration for the deal. Is he right? Explain.
An economic explanation for why people make different choices begins with accepting the proverbial wisdom that tastes are a matter if personal preferences. But economist also believe that the choices people make are influenced by their incomes, by the prices of goods and services they consume, and by factors like where they live. How do you make choices about what to buy, how much to work, and how much to save?
Reagan spends more time doing research regarding which car she is going to purchase than she does regarding which coffee maker to purchase. This illustrates the consumer choice principle that: the marginal utility derived from coffee is higher than a car. consumers ignore opportunity cost when doing research. consumers make decisions as if they have unlimited resources and income. the time and effort consumers spend in acquiring information is directly related to the potential value derived from the information.