Exercise: The Effect of Gasoline Prices on the Fuel
Economy of Cars.
Hypothesis:
Consumers are generally pretty sensitive to price
issues, but rather insensitive to more abstract issues, such as
environmental protection, conservation etc. when it comes to day to day
choices. One suggestion to entice consumers to buy cars with better gas
mileage is to make gasoline more expensive by raising gasoline taxes.
I want you to test whether this approach really works, or whether factors
other than gasoline prices significantly affect the purchasing decisions of
consumers.
Below are two data sets that give you the price of
gasoline in countries of the European Union and the USA as well as the
average fuel efficiency of newly registered cars in Europe and the USA.
Gasoline prices in Europe and USA
Average fuel efficiency for new cars
(from CEMS, US data from EPA)
- What assumptions do you have to make when testing
this claim? (3 points)
- Using the data given (and any additional data you
think might be useful) test the hypothesis stated above. (4 points)
- How could you improve your analysis? You should
make specific suggestions, and tell me why and how they might affect your
analysis! (3 points)
Suggestions:
- Download the Excel spreadsheet and add the gasoline
price data. A graph of the two parameters might facilitate a
comparison.
- Make sure your answer is backed up by data!
Extra Credit: (2.5 points)
Follow some of your suggestions from above and gather some extra data to
expand your analysis. |