10/10/2005

Smaller is Better

For all you truck lovers out there, myself included, it may be time to trade our Diesel powered automobiles in for a smaller compact car. Dealerships agree and are going to start supplying these cars so as to meet our demands. In this article it says that on average it costs SUV's over 70 dollars to fill up a tank. That is ridiculous when there are cars out there such as Honda that will cost you half of that, and will run just as good. (We just don't get the great sounding engine).

1 comment:

Dr. Tufte said...

-1 on Emily's and Dan's comments for spelling errors.

I hate to break it to you folks, but if you don't already own a small car you're unlikely to benefit by switching.

One of the most subtle aspects of economics is that virtually all benefits go to the holders of fixed resources.

This means that if you own a more efficient car before prices rise, then you can benefit (from the perspective of recently rising gas prices your car is a fixed resource).

But, people who switch can't benefit (in general). The reason is that if they switch, they will push up the price of efficient cars. If they don't, then they have to pay for the more expensive gas in an inefficient truck. Either way, you're going to end up paying more.