Running head: ECONOMIC DECISION PAPER 1

Economic Decision Paper

Tamara Wolf

ECO 212

March 14, 2011

Darrell Watts
ECONOMIC DECISION PAPER 2

Economic Decision Paper

Everyone is feeling the effects of gas prices reaching an all-time high. Filling up on gas

for less is easy at Kroger grocery stores and participating Shell locations. Kroger offers a fuel

program that lets the public receive discounts on purchasing fuel at Kroger and at participating

Shell locations. For every hundred Kroger plus points earned, a shopper can save 10¢ off per

gallon of gas at any participating gas station. Earning Kroger Plus points are easy. For every

dollar spent on groceries one point is earned. When filling two prescriptions one hundred points

will be earned. Purchasing gift cards double points are awarded. Everyone has to shop for

groceries somewhere, why not Kroger with the bonus of saving on your groceries and at the gas

pump.

Marginal benefits are saving 10¢ per every gallon of gas purchased. Marginal cost are the

following: buying groceries at Kroger to receive points and the requirement of earning one

hundred points to save 10¢ off per gallon of gas at participating gas stations. Some incentives

that could help make different decisions could be lower gas prices at a different gas station, or a

gas card if I would save more than 10¢ off per gallon on gas purchases. There is even the

possibility of changing to another grocery store if their reward points program was better.

With gas prices going up every week and sometimes every day, the freedom to choose

which gas station to purchase gas from, is an example of market economy. We as consumers will

not have the money for extras, like comfort food, or entertainment, as the cost of commuting to

and from work will eat up more of the household earnings. Households and education systems

are spending more money on gas and less on luxury items like vacation travel, or field trips for

students. Many travel plans may need to be postponed since the Market economy has been

affected hard by the constant rise in gas prices. The costs are rising for road trips for trucking

and fuel for airlines causing plane ticket prices to increase at some airlines.
ECONOMIC DECISION PAPER 3

Centrally planned economics is the government deciding to avoid buying oil or limiting

how much is produced. The government can control how much gas consumers can buy at a given

time at the pumps. Currently the United States produces about two percent of the world’s oil; the

country needs to develop a different kind of fuel source that can be ecologically effective so we

can be less dependent on oil. When we as a country do not depend on oil, the fuel cost will be

less and the economic market can bounce back. We need the government to jump in and control

the price of gas and regulate the gas station pricing at the pump. At any given day there are two

to three gas stations on one block and each station has a different price. Therefore, in this case a

mixed economy could be beneficial, where the public and private sector could come together to

control the cost of this specific type of goods and services.

With gas prices needing to be regulated we should consider using a method that will

make both the buyer and seller happy. I think lower prices for gas will help the economy. The

public will have money to spend on necessities and wants, and individuals who have limited

incomes will not have to choose between food, medicine or gas. We need alternative energy

sources from the United States that the common man can afford to use, so we can decrease or

eliminate the dependence on foreign oil. Better vehicles should also be made in the United States

and sell for under 15k dollars, which can run on an alternative fuel source.