Final answer:
The rebound effect describes how improvements in fuel efficiency or higher costs of gasoline can initially reduce consumption, but behavioral changes may ultimately offset these savings, potentially leading to increased gasoline use over time.
Step-by-step explanation:
The rebound effect refers to a scenario where the expected reductions in gasoline consumption from efficiency improvements are offset by changes in behavior.
For example, when a car becomes more fuel-efficient and travels more miles per gallon, the cost per mile to drive decreases. This can lead to an increase in driving, which could partially or completely counteract the fuel savings from the vehicle's improved efficiency. Similarly, if the cost of gasoline is high, people may drive less initially. However, over time, they may make long-term adjustments, such as buying more fuel-efficient cars or moving closer to work, which will increase their price elasticity of demand for energy and could lead to greater overall gasoline consumption. The rebound effect is an important consideration in the relationship between fuel efficiency, consumer choices, and the overall consumption of energy resources like gasoline.