Economics

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 for U.S. automakers to build this energy-efficient car.

a. Is energy efficiency the same thing as economic efficiency? Explain
b. Under what circumstances would the energy-efficient automobile described here be economically efficient?
c. 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 automobiles?

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  1. Energy efficiency may NOT be the same thing as economic efficiency. I have forwarded your post to 2 of my brothers, both executives in the car industry. Let's see what comments (if any) they make!

    Sra

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  2. One comment was "Without having seen the 'vehicle' it is difficult to comment. What is its package for occupants and luggage? What is its speed capabilities? Safety compliance?

    a. No, they are not necessarily the same thing. Sometimes building something energy efficient can cost a great deal and therefore not be economic efficient.

    b. If it cost no more than building an ordinary car, then it is economic efficient.

    c. It may even come to that!

    Sra

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