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Suppose gas costs $3 a gallon and the average car gets 28 miles per gallon. If...

Suppose gas costs $3 a gallon and the average car gets 28 miles per gallon. If Congress mandates that cars have to get 36 miles per gallon, by what percentage will this lower the costs of driving? If the elasticity of total miles driven (per year) with respect to the cost of driving is –1, by how much will total miles driven per year increase, assuming it is 10,000 miles at the beginning? How much will total annual gas consumption of the average car change as a result of the mandated program?

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Rahul Sunny answered 2 years ago
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