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    Which car to choose

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    You drive 5000 miles a year and buy gasoline at the price of $2/gal. Except for differences in annual costs, you are indifferent between driving a 10 year old Buick ($400/yr, 20 miles per gal) or a 10 year old Toyota ($800/yr, 50 miles per gal).

    (a) Which one do you choose to drive?

    (b) How does your decision change if the price of gas is $1.75 per gallon?

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    Solution Preview

    (a) We would drive which has lower total cost since it is the cost which makes the difference.
    For Buick - number of gallons used = ...

    Solution Summary

    The solution explains how to choose which are to drive based on cost considerations.