Author Question: What costs associated with the new miles-per-gallon requirements arise from decisions made in ... (Read 18 times)

gbarreiro · **on:** Jun 29, 2018

What costs associated with the new miles-per-gallon requirements arise from decisions made in self-interest and in the social interest?

What will be an ideal response?

Question 2

How is the market demand curve for new capital derived?

What will be an ideal response?

morrie123456 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Automobile producers and buyers make their decisions in pursuit of their self-interest, but boosting gas mileage requires more costly engines, which in turn means the cost of producing automobiles and their prices will rise. President Obama's decision to impose the new regulations is intended to serve the social interest, so all the costs associated with the new miles-per-gallon regulation arise from this decision made in the social interest.

Answer to Question 2

The market demand curve for new capital is the sum of all of the individual demand curves for new capital in the economy. It represents the level of total investment undertaken by all firms at every interest rate.