The Scorpio Miser with its special high-efficiency engine costs more to buy than the standard Scorpio sports car. At ...
amarachicynthiaFebruary 2, 2021
Understanding the stimulus
I am having trouble understanding this stimulus. I do not have any background knowledge of it. Can you please explain it to me in layman's terms?
Thanks
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Here, we are comparing two cars. The Scorpio Miser is more expensive than the Scorpio sports car. The Miser is also more fuel efficient than the sports car. This means that the Miser will be worth its higher price because at some point it will make up for it with gas savings. At current gas prices, that point is 60,000 miles.
From this, the author concludes that lower gas prices would take fewer miles to reach the break-even point. This is an error because the opposite is true! Lower gas prices would mean that more miles would be required for the Miser owner to break even. If gas prices are low, then he isn't saving very much.
Answer choice C makes a very similar error. In reality, the Roadmaker would be especially advantageous where average wages are high. If average wages are low, then the Roadmaker is not saving as much money.
