Question

In: Economics

The corporate average fuel economy​ (CAFE) standard for mileage is currently 28 miles per gallon of...

The corporate average fuel economy​ (CAFE) standard for mileage is currently 28 miles per gallon of gasoline​ (the defender) for passenger cars. To conserve fuel and reduce air​ pollution, suppose the U.S. Congress sets the CAFE standard at 35 miles per gallon​(the challenger) in 2010. An auto will emit on average 0.8 pounds of carbon dioxide ​(CO2​) per mile driven at 28 miles per​ gallon, and it will emit 0.7 pounds of O2 per mile driven at 35 miles per gallon.

a. How much fuel and carbon dioxide would be saved over the lifetime of a passenger car with the new​ standard? Assume a car will be driven 97,000 miles over its lifetime.

b. If CO2 costs ​$0.02​/lb to capture and​ sequester, what penalty does this place on the​ defender? Should this penalty affect the CAFE replacement​ analysis?

Solutions

Expert Solution

Given,

The details related to two different standards of (CAFE) Corporate average fuel economy.

Current CAFE New CAFE
Mileage 28 35
Carbon dioxide emission 0.8 0.7

(A)

Here we have to find That how much fuel and carbon dioxide would be saved over the lifetime of a passenger car with the new standard.

Assuming the car will be driven 97,000 miles over its lifetime

if a car is driven 97,000 miles over its lifetime, the gallons of fuel required for two different standards of the CAFE is

------------------------------------------------------------------------------------------------------------------

CURRENT CAFE:

(97,000 MILES / 28 MILES PER GALLON) = 3,464.2857142857 Gallons or

3,464.29 (The answer is rounded to 2 decimal places).

----------------------------------------------------------------------------------------------------------------------------

NEW CAFE:

(97,000 Miles / 35 miles per gallon) = 2,771.4285714286.Gallons

or 2,771.43 (The answer is rounded to 2 decimal places).

-----------------------------------------------------------------------------------------------------------------------

Thus, the new, fuel saving will be ( 3,464.29 - 2.771.43) = 692.86 Gallons of fuel will be saved over the lifetime of a passenger car with the new standard.

------------------------------------------------------------------------------------------------------------------------

Carbon dioxide (Co2) saved over the lifetime of a passenger car with the new standard; Assuming a car will be driven 97,000 miles over its lifetime.

(97,000 miles) * (0.8 - 0.7) lb per miles = 9,700 lb

Hence, 9,700 lb of Carbon dioxide (Co2) is saved over the lifetime of a passenger car with the new standard.

-----------------------------------------------------------------------------------------------------------------------

(B)

Carbon dioxide (Co2) cost $0.02 lb to capture and sequester

Here we have to find the penalty does this place on the defender.


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