Question

Use the economics concepts learned in Chapter one to answer the following questions:

(Note: Some economics concepts you may consider -- opportunity cost, law of demand and supply, preferences, price of alternative products, budget, etc)

Maya and John are a couple that have been married for three years, they have been living in an apartment for the past four years in Encino. On an ordinary sunny morning, Maya finds a flat tire on her Corolla. Panicked, she wakes up John and takes the key of his Jeep; her work schedule is not flexible at all!

John could easily feel that his boss was not happy when he called for an absence. Frustration aside, he needs to get the flat tire repaired. John doesn’t want to call the towing truck and he knows how expensive that could be. However, replacing the flat tire with the spare is no small task given John’s subpar mechanic skills and the fact that his mind is full of a recent case he has been dealing with at work. Two and half hours after he started, the spare is successfully on the car as John collapses in a heap in their living room. As he is useless for another half an hour, John searches online and finds a good deal of tires in a nearby tire shop. He ends up spending the whole day to take care of the tire problem for Maya.

Maya is happy to see her newly equipped Corolla when coming home. As she is joking about the car wash not even letting John’s Jeep in, Maya seriously complains that she spent almost $85 to fill up the tank. John admits that he might have some mud on his car but comments she will always see a highway congested with cars and SUVs in L.A. no matter how high the gas price would be. Maya doesn’t argue with John considering it took her almost two hours on the highway this morning. However, she starts thinking seriously about how to reduce their budget on gasoline.

What do you think about John's comment on gasoline price?(100-150 words)

Answer 1

According to john lifestyle of people have increased to a large extent towards mechanization.people dont want to walk,even if the distance is average.peoples preference in LA are cars and SUVs.these are vehicles that rule the road in LA.even if the price of gasoline increases,people still buy gasline and they drive these vehicles because their budget is high,and they dont find any substitute for these vehicles.

Ifthey have to go to work,it needs to be made sure that they reach in time.here there is opportunity cost involved.they might take public transport also but because they think cars are fast,so they prefer to use cars rather than public transport.for the people opportunity cost of travelling by car is public transportation facility,which is the next best alternative an they forego it.the demand for such vehicles is more and also supply as more and more car companies are selling them relative to demand.therefore roads are congested with them allthough price of gasoline is high.