Please write your answers for each of the following questions. 1 1. In the late 1970\'s, the U.S. mandated a maximum highway speed of 55 miles per hour to economize on fuel. Evidence showed that the lower 55-miles-per hour speed limit also significantly reduced traffic fatalities. Nevertheless, when the gas shortage eased, we have returned to the higher speed limits. Provide an economic rationale for not permanently lowering the speed limit to 55 miles per hour when we know that it will save lives. 2. Explain how each of the following scenarios illustrates the interaction of economic forces, social and cultural forces, and political and legal forces. (a) State officials are trying to move welfare recipients into jobs during a period of economic weakness, rising unemployment, and declining federal funding. (b) The European Union is funding a massive program to explore ways of using hydrogen to replace fossil fuels both to increase energy availability and to protect the environment. (c) In some states, many types of retail stores are prohibited from opening before noon on Sunday. (d) In North Dakota, most colleges and universities are located in small towns. Despite shrinking student populations, state law mandates that all of these schools remain open.
1. Permanently lowering the speed limit to 55 per miles will have huge economic costs. This will slow-down transportation of goods and people. Therefore, people will and goods will have to spend more amount of time on the roads, which will increase costs and make the economy less efficient. When people have to spend more time on roads, it has an opportunity cost as they can spend less time at work and earn less. Similarly, when transportation time increases, it increases turn-around time for companies and they become less efficient. Therefore, lowering speed limit will have significant economic costs. By increasing the speed limit, a significant amount of economic resources can be saved which can be invested in healthcare and save much more lives.
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