Mysteries 答案

Great analysis.   The great profit margins of SUV is an incentive to auto makers.  The conversion to fuel efficient SUV engines is claimed (a joke) to be costly, so a disincentive.  Funny site on SUVs at http://www.detroitproject.com/.  When I was doing my Master in the US, gas was some $1.1-3 a gallon.   BTW, the interest rate hike is anticipated, so you know the rest.  

The conspiracy theory has been suggested numerous times but I really don't see any substantial incentive for American automakers to be gaining from such exchange.  Perhaps if the skyrocketing of oil prices wasn't so persistent this might've made more sense.  American automakers were desperate, but they only seem to be more desperate at this moment after consumer index stopped seeing the "light of day."  With the Fed consistantly battling inflation and commodity prices rising but at much of a slower rate, I must say the benefits did not go to the auto industry but only to certain independent gas providers like local heating companies who nevertheless are not "accredited" enough to make such deals anyway.  Federal and State governments meanwhile have shown little interest in providing subsidies for people paying sky-high gas prices - so back to the the conspiracy theory - doesn't it smell like political turmoil now!

If I am kind of a conspiracy theorist, I will surmise that the auto industry is the buddy of the oil companies - you make gas guzzling cars that sell at a handsome profit margin, I get more money from selling oil.  According to the celebrated game theory, the likely consequence is big cars and hefty gas bills (this is the supply side).  A go-back to smaller cars can cut profit margins and affect the big auto worker unions - factor price downward inelasticity.  After all, oil prices in the US were just cheap as water until about two years ago, and the cost of financing a Humvee is quite low given the property boom and the low interest rate (the demand side).  So even the Japanese and Germans are making big SUVs for the US market, though everyone including the US has the technology to produce fuel efficient cars.   A "free market" of free choice leading to wastage -- externalities --some problems occurred in the pricing of oil? Not so sure...

不好意思, 不知為何出現那麼多回應呢...上個回應裡的"ostentious"是"ostentatious", 我真是電腦百痴 .

Viscount, I hear your question more often in sociology classes than in econ classes.  Economists once believed it wouldn't take long for Americans to realize the absurdity in driving SUV's slightly larger than their own bedrooms.  Patriotism certainly plays a huge part in the movement, but what I thought was more intriguing is this lack of sentiment in the American society to preserve - whether gas or money.  There is of course no economic benefit from driving these monsters, so the only advantages I could ever come up with are more socio-psychological.

Viscount, I hear your question more often in sociology classes than in econ classes.  Economists once believed it wouldn't take long for Americans to realize the absurdity in driving SUV's slightly larger than their own bedrooms.  Patriotism certainly plays a huge part in the movement, but what I thought was more intriguing is this lack of sentiment in the American society to preserve - whether gas or money.  There is of course no economic benefit from driving these monsters, so the only advantages I could ever come up with are more social-psychological.

Comes as very much a surprise to me that I've been drifted to read a blog written by a US-educated high-flying British LSE employee here.  Your professor's answers are, in my humble opinion, not quite the full picture -

(1) manufacturers do "four-gear" for low cost auto-transmission cars.  For Mercedes, they now got six-gear for high-end models (seven-gear in the pipeline).   It really depends on whether they are selling a commodity, or whether they are selling an ostentious good.  For the latter, the R&D and production costs would likely pass cost-benefit analysis.

(2) if that is required by law, all banks have to modify the ATMs.  This is something about the economic implications of law.  Of course you can quote Coarse Theorem here to say that blind people, if they come up to demand braille, will equally solve the problem;

(3) on this I agree with the answer given.  Ryan Air and Easyjet (both budget airlines) know all these calculations so they offer no meals -- but you can buy sandwiches on board.  A kind of economics in action?

A question: why is it that the US auto industry is still producing gas guzzling, utterly useless and incredibly unsafe SUVs? Is it not that the US is a technologically advanced nation?  (點解通街都仲有d食油的車)

你的中文水平十分高, 閱書甚廣, 乃大器之人.  非常欣賞你的才華.

Comes as very much a surprise to me that I've been drifted to read a blog written by a US-educated high-flying British LSE employee here.  Your professor's answers are, in my humble opinion, not quite the full picture -

(1) manufacturers do "four-gear" for low cost auto-transmission cars.  For Mercedes, they now got six-gear for high-end models (seven-gear in the pipeline).   It really depends on whether they are selling a commodity, or whether they are selling an ostentious good.  For the latter, the R&D and production costs would likely pass cost-benefit analysis.

(2) if that is required by law, all banks have to modify the ATMs.  This is something about the economic implications of law.  Of course you can quote Coarse Theorem here to say that blind people, if they come up to demand braille, will equally solve the problem;

(3) on this I agree with the answer given.  Ryan Air and Easyjet (both budget airlines) know all these calculations so they offer no meals -- but you can buy sandwiches on board.  A kind of economics in action?

A question: why is it that the US auto industry is still producing gas guzzling, utterly useless and incredibly unsafe SUVs? Is it not that the US is a technologically advanced nation?  (點解通街都仲有d食油的車)

你的中文水平十分高, 閱書甚廣, 乃大器之人.  非常欣賞你的才華.

sorry 發雞盲 睇唔到你有個新topic....

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