Analyzing energy efficiency & economic efficiency.
Engineers at the national research laboratory built a prototype automobile that could be driven 180 miles on a single gallon of unleaded gasoline. They estimated that in the mass production the car would cost $40,000 per unit to build. The engineers argued that congress should force us automakers to build an energy-efficient car.
a. Is energy efficiency the same thing as economic efficiency?
b. Under what condition 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?