Chapter 5, Problem 26AA

a)

To determine

To find: The necessary expenses presented in the cartoon.

Explanation of Solution

Necessary expenses are those expenses that are very important and avoiding such type of expense will lend a person in some other kind of loss. Therefore, in the cartoon, the gas expense is a necessary expense in order to drive the car.

b)

To determine

To find: The reason to choose to stay at home.

Explanation of Solution

Since income is a scarce resource and the expenditure of a person is fixed according to the income earned. If the price of anything increases then the person tries to compensate for it by avoiding other expenses or it may be possible that the person can avoid the service whose prices have increased. Thus, an increase in gas prices induces the person to stay at home.

c)

To determine

To find: The effect of rise in oil prices even after avoiding the driving.

Explanation of Solution

The person gets affected even by avoiding driving because there are other activities that require the use of fuel. Such as oil is needed to heat the house or if the person void driving then the person will have to avoid their outside works. Thus, by avoiding those works, a person can be affected.