http://www.plain-sense.com/2009/04/01/how-a-recession-is-good/ For students and friends of economics Fri, 03 Feb 2012 01:36:33 -0800 http://wordpress.org/?v=2.8 hourly 1 http://www.plain-sense.com/2009/04/01/how-a-recession-is-good/comment-page-1/#comment-32 Paul Fraker Fri, 10 Apr 2009 14:07:17 +0000 http://www.plain-sense.com/?p=78#comment-32 I don't see how you, as an economist, could have failed to see the fallacy of Owen's assumption regarding fuel economy and gasoline prices. If the former doubles, or the latter halves, do we suddenly double the miles we drive? He assumes the price elasticity of demand is 100%! At most it is 10-15%, probably less. This puts the lie to his contention that increased fuel economy does nothing to help reduce carbon emissions. Shame on New Yorker editors for letting this whopper pass by. They were too enthalled by his ideas to notice that they are based on false assumptions. I don’t see how you, as an economist, could have failed to see the fallacy of Owen’s assumption regarding fuel economy and gasoline prices. If the former doubles, or the latter halves, do we suddenly double the miles we drive? He assumes the price elasticity of demand is 100%! At most it is 10-15%, probably less. This puts the lie to his contention that increased fuel economy does nothing to help reduce carbon emissions. Shame on New Yorker editors for letting this whopper pass by. They were too enthalled by his ideas to notice that they are based on false assumptions.

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