Engineers at a national research laboratory built a prototype automobile that could be driven 180 miles on a single gallon of unleaded gasoline. They estimated that in mass production the car would cost $40,000 per unit to build. The engineers argued that Congress should force US automakers to build this energy efficient car. Is energy efficient the same thing as economic efficiency? Why? Under what circumstnaces would the energy-efficient automobile described here be economically efficient? If the goal of society is to get the most benefit from its limited resources, then why not ignore economic efficiency and build the energy saving automobile?

Energy efficiency and economic efficiency are not the same thing, although they are related concepts.

Energy efficiency refers to the ability of a system or device to utilize energy effectively, meaning it can achieve its intended purpose while minimizing energy consumption or waste. In this case, the prototype automobile is considered energy efficient because it can travel 180 miles on just one gallon of gasoline, indicating it can achieve a high level of performance while using a relatively small amount of fuel.

On the other hand, economic efficiency refers to the ability of a system or device to allocate resources in a way that maximizes overall economic welfare. It involves maximizing the benefits obtained from the available resources by minimizing waste, inefficiencies, and opportunity costs. Economic efficiency takes into account not only the costs of production but also the value or benefits received by the consumers.

In the scenario given, the engineers argue that Congress should force US automakers to produce this energy-efficient car. To assess whether the energy-efficient car would also be economically efficient, we need to consider various factors:

1. Cost: The estimated cost of building this car in mass production is $40,000. It is crucial to compare this cost with the benefits obtained by society. If the savings made by reducing fuel consumption outweigh the production cost, the car could be economically efficient.

2. Demand and Market Potential: The engineers should assess the potential demand for such a car in the market. If there is sufficient consumer demand and market potential, it could contribute to economic efficiency.

3. Externalities: Consideration should also be given to externalities, such as environmental benefits and reduced dependency on fossil fuels. If the energy-efficient car contributes to positive externalities, such as reduced emissions or energy conservation, it may further enhance its economic efficiency.

Regarding the societal goal of maximizing benefit from limited resources, it's important to consider economic efficiency alongside other factors. While the energy-efficient car may provide environmental benefits and energy savings, if it is not economically efficient, it may result in wasteful allocation of resources. Building the energy-saving automobile without considering economic efficiency could lead to inefficiencies, increased costs, and potential negative impacts on the overall welfare of society. Thus, it is crucial to strike a balance between energy efficiency and economic efficiency to achieve the most optimal use of limited resources.