EXCERPT:
" The cost for a one-way 26-foot truck rental from LA to Houston is $2,279, more than 2.5 times the cost for a truck going in the opposite direction ($892), suggesting that there are a lot more people moving out of California to Texas, than from Texas to California."
QUESTIONS:
1. We've emphasized that prices are signals - they communicate information about the value of resources and coordinate the actions of producers and consumers. In terms of supply and demand, what does the high price for a truck rental in Los Angeles relative to Texas tell you?
2. California is known for high tax rates and intense regulation of businesses in comparison to Texas. Do you think there is a connection between the high tax rates and intense regulation, and the high price for renting a truck in Los Angeles? Explain.
