Suppose that in an attempt to induce citizens to conserve energy, the government enacts regulations requiring all air conditioners to be more efficient in their use of electricity. after the regulation was implemented, government officials were surprised to discover that people were using even more electricity than before. how is this possible?

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. the energy efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity costs. the standard model has features similar to the energy efficient model but provides no future saving in electricity costs. it is priced at only $500. assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase