ERIE COMMUNITY COLLEGE
TITLE III GRANT
How Do Increases in Gas Prices Affect You Personally?
Interdisciplinary Course Materials
Business Administration
COURSE: MT 001/MT 006
COURSE OUTLINE TOPICS:
· Perform basic computations with rational numbers.
· Apply the rules for rounding.
· Represent a comparison of data in ratio form and solve proportions (including using units of measure).
· Present organized written work and analyze your answer.
· Read critically and think logically when solving application problems.
PROJECT TITLE: How do gas prices affect you personally?
PROJECT DESCRIPTION:
What is the true value to gas price increases? What is the dollar value associated with an increase in a car’s gas mileage rating? In this project, you will calculate the dollar impact for every penny/gallon increase in gas prices. Once this is done, the student will calculate the real impact in dollar cost of their personal car on an annual and monthly basis. Furthermore, the student will also derive the gas consumption and dollar value associated with improving the gas mileage by 5 mpg.
AUTHOR: Deborah Doucette, Mathematics
CURRICULUM EXPERT: Richard Rich, Business Administration
SEMESTER CREATED: Fall, 2009
A. ESSENTIAL QUESTION
Gas prices are increasing. Emotionally we watch these gas prices increase and cringe at the thought of having to pay more. Some people purchase new cars with better gas mileage. Is taking on an added monthly payment to save on gas mileage really worth it? Let’s take the emotions out of this and evaluate the real annual and monthly dollar impact.
B. THINGS TO LEARN BEFORE STARTING THE PROJECT:
Before starting this project, you will need to know how to calculate costs using prices per gallon. In addition you need to know how to calculate your car’s gas consumption. Furthermore, you need to know how to use a calculator for basic arithmetic computations as well as know how to use proportions or multiplying by rates to solve for unknowns. In all of these computations, it is important that the student understands and uses units of measure.
C. BASIC DIRECTIONS:
Do you know your gas mileage rating? If you don’t know your car’s gas mileage rating then you’ll have to calculate it. The formula is listed below. In order to use the formula, you must fill up your gas tank. Write down the current odometer reading, we’ll call this M1, before you drive away from the gas station. Drive your car for a while and next time you fill up your tank, write down your new odometer reading, M2, as well as the amount of gas you pumped into your tank. Let’s call the amount of gas that you pumped into your car, G. It’s important that you fill up your tank for this calculation.
Next we’re going to assume that your average annual mileage usage is the national norm: 12,000 miles.
It’s important that you show all of your work for all of these calculations. When you show the work, include the units of measure so that you ensure you’re calculating and analyzing comparable numbers.
Now let’s do some calculations:
D. PROJECT ASSIGNMENT:
1) Write down your gas mileage rating for your car on this line: ______(A) (round to the nearest tenths place)
If you don’t know it, then follow the directions above and fill in the data as follows. Make sure that you show your computation values:
M2 – M1 = miles per gallon (or mpg)
G
2) Take note of the current gas price at your ‘favorite’ gas station and write down the price of gas on this line: $______/gallon (B)
3) Next, let’s calculate the amount of gas that you use on an annual basis. We can do this by assuming that you drive approximately 12,000 miles per year (this is the national average). Divide 12,000 miles by your gas mileage rating from line (A). This is your annual gas usage in gallons. Make sure that you show your work and show the units of measure in the computation. Round your answer to the nearest tenth and write it down on the line noted as (C):
Annual gas consumption: ______gallons (C)
4) Next, let’s calculate your annual cost of gas assuming that the price of gas doesn’t fluctuate much from the price that you notated on line (B). Multiply your annual gas consumption in gallons (C) with the current price per gallon from (B). Show your work along with the units of measure below. Round your answer to the nearest ten’s place and write it on the line notated as (D):
Annual cost of gas: $______(D)
5) What is the monthly cost of gas? (show your work in the space provided and round to the nearest ten’s place)
Monthly cost of gas: $______
6) Ok, now that we know how much you spend on gas per year, let’s see what the incremental cost is for every penny /gallon increase in gas price. Take your annual gas usage from line (C) and multiply this by $.01/gallon. Write this down on the line marked (E) and show your calculation in the space provided. Round to the nearest hundredth:
Incremental cost of gas for 1 cent increase in price: $______/year (E)
Take your incremental cost of 1 cent/gallon (E) and round it to the nearest whole dollar. $______/year. This is the dollar impact on an annual basis for each penny/gallon increase in gas price.
7) Now, let’s see what happens to your cost as the prices rise. Fill in the following table with the price increases:
Increase in price: / Annual Incremental Cost of Gas for Each Increase in Price.Round to the nearest hundredth and show the work in each cell. Don’t forget the units of measure: / Cost per Month for Each Increase in Price
Round to the nearest hundredth and show the work in each cell. Don’t forget the units of measure:
$.01/gallon
$.10/gallon
$.15/gallon
$.20/gallon
$.30/gallon
$.40/gallon
$.50/gallon
$1.00 gallon
$2.00/gallon
8) Which increase in price is your breaking point? Why?
9) As the gas prices increase, are you going to make any changes to accommodate the increase in your gas expenditure? What are you going to do?
10) Do you have a level in mind that if the gas prices increase by $ x/gallon you’re going to buy/lease a different car that gets better gas mileage? Explain.
11) Sometime we get very emotional about price increases. Sometimes we think that buying a new or used car with better gas mileage is a good option. Sometimes it is. Sometimes the finance costs or payments per month aren’t worth it. It really depends. However, let’s see what the annual fuel price impact and monthly savings would be if you were to improve your gas mileage. Let’s first identify the savings associated if you were to buy/lease a car which improves your gas mileage by 5 mpg.
Write down your current car’s gas rating in miles per gallon:
______mpg (from line A)
Add 5 mpg to this number and write it down on this line: ______mpg
12) Now, let’s compute the new gas consumption with the assumption that you’re still driving 12,000 miles per year. Show how you derived the number in the space below:
New gas consumption with new mpg: ______gallons
(round to the nearest tenth)
13) Take your new gas consumption and calculate your annual cost of gas using the current price of gas identified on line B. Show the calculation in your derivation of this number in the space below. Don’t forget to show the units of measure and to round to the nearest ten’s place:
New annual cost of gas : $______/year
14) What is the monthly cost of this gas? Show your work in the space below:
New monthly cost of gas: $______/month (round to the nearest dollar)
15) What is the annual difference between your current gas consumption and the 5 mpg improvement (show the arithmetic operation in the space below and include the units of measure):
Annual difference between the two mpg ratings: $______/ year
16) What is the monthly savings between your current annual gas consumption and the 5 mpg improvement (show the arithmetic operation in the space below and round to the nearest dollar):
Monthly difference between the two mpg ratings: $______/ month
17) Based upon the dollar impact of the improvement in mpg, is the savings worth purchasing/leasing a different car and perhaps adding a monthly payment to your budget? You may want to compare it to the incremental increase in price of gas you completed in question 7. Explain your answer below.
E. STUDENT RESOURCES:
Students will need a calculator and a car. If they don’t own a car, then they’ll have to choose some car they would purchase to complete this project.
F. FACULTY RESOURCES:
Faculty will need to have covered problem arithmetic, rates, proportions and rounding.
G. GRADING RUBRIC
ü 4 points for each computational question:
· 2 points for showing the work (including the units of measure)
· 2 points for the correct answer (rounded as indicated)
ü 5 points for each free response question.
Gas Price and Mileage Analysis Page 1