A ride-hail service must choose cars. In the 2021 model year, gasoline-powered Hyundai Elantra yielded 31 miles per gallon, while the hybrid gasoline-electric Toyota Prius yielded 54 miles per gallon. In the United States, the cheapest Elantra cost US$19,650 as compared with the cheapest Prius at US$24,525. Suppose a business has bought both cars. (Hint: The following questions do not require any calculation.)

1. Compare the fixed and variable costs of operating the two cars. 2. Compare the short-run break even prices of operating the two cars. 3. How does the break-even price depend on the price of gasoline? 4. In the short run, if demand falls, which car should be withdrawn from operation? 5. In the long run, demand is uncertain. Justify the following plan: buy Priuses to meet the lowest expected demand, and then buy Elantras for the additional demand.