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 40000 per unit to build. the engineers argued that congress should force us 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 automobile ?
a) No, energy efficiency and economic efficiency are not the same thing. Energy efficiency refers to the ability to use energy resources effectively and minimize waste. It focuses on maximizing the output or performance per unit of energy input. On the other hand, economic efficiency is concerned with utilizing resources in a way that maximizes overall well-being or welfare, taking into account both costs and benefits. It aims to achieve the most efficient allocation of resources to maximize societal welfare.
b) The energy-efficient automobile described here would be economically efficient under certain circumstances. To determine the economic efficiency, we need to consider the cost of production, the benefits derived from using the car, and compare it with alternative options. If the cost to build each unit of the energy-efficient car is lower than the value society places on the benefits it provides, then it would be economically efficient. For example, if the cost is $40,000 per unit but the benefits, such as lower fuel consumption and reduced emissions, exceed this cost, then it would be economically efficient.
c) While the goal of society is to get the most benefit from limited resources, it is essential to consider economic efficiency along with other factors. Ignoring economic efficiency in favor of energy savings alone could lead to inefficient resource allocation and potential negative consequences. Economic efficiency considers the trade-offs and opportunity costs, taking into account the cost of production, alternatives, and the overall welfare of society. By considering economic efficiency, policymakers can make informed decisions to best allocate limited resources and achieve the greatest benefit for society as a whole.