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    Econ #8

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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

    Buick 20 miles per gal => 5000 miles per 250 gal => $500 in total at $2/gal, plus $400/yr = 900
    Toyota 50 miles per ...

    Solution Summary

    Solution provides steps necessary to calculate which vehicle has the best gas mileage.