Engineers at a national research laboratory built a prototype automobile that co
ID: 446433 • Letter: E
Question
Engineers at a national research laboratory built a prototype automobile that could be driven 180 miles on a single gallon of gasoline. They estimated that in mass production the car would cost $40,000 per unit to build. The engineers argued that Congress should force U.S. automakers to build this energy-efficient car. In your opinion, is energy efficiency the same thing as economic efficiency? Please explain your opinion and state whether you support it or not. 2. Assume that a firm’s long-run average total cost (ATC) is constant. Which of the following functions, where Q is output; L is labor input; K is capital input, is more likely to represent the firm’s production? Please explain your choice. • Q = f(L,K) = L + K • Q = f(L,K) = L*K • Q = f(L,K) = L2 + K2 Please answer all of the three questions by one paragraph for each in one posting.
Explanation / Answer
a.) In my opinion Energy efficiency is a subset of Economic efficiency. Economic efficiency as a whole talks about a whole gambit of things and energy is all about making minimal use of non renewable energy resources. As in here , the car maker manages to use just 1 Gallon for 180 miles
As per definition economic efficiency implies an economic state in which every resource is optimally allocated to serve each person in the best way while minimizing waste and inefficiency. Here it is talking about using all the resources in most efficient manner . When a automobile is bought in the life cycle cost, apart from the acquisition cost of 40,000 $ there is a huge cost of operation involved in the form of Gasoline. This also directly impacts the environment in return.
So here the idea is to have goods produced at their lowest possible cost, as are the variable inputs of production.
So according to me energy effieciency is one and he same thing as economic efficiency where the automaker is trying to use the non renewable energy is a efficient way and reducing any form of inefficency
2. Q being the Output, L is Labor Input and K is capital input for each unit
Of the three
Q = f(L,K) = L + K
Q = f(L,K) = L*K
Q = f(L,K) = L2 + K2
The right soultion is Q = f(L,K) = L + K
Automaker industry has constant reurns to scale , i.e the amount of output will increase proportionally to any increase in the amount of inputs. It can produce one unit of output for every unit of capital or labor it employs.
This production function says the same
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