Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 4P
(a):
To determine
Calculate the implicit cost.
(b):
To determine
Calculate the capital need to spend.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
- 16 (10%) (page 2 of 3)- Google Chrome
urses.open.uwi.edu/mod/quiz/attempt.php?attempt3D43724&cmid3D461748&page=D1
Exchange 2020
12015 Mathematical Methods of
Economics I | S2 20
Ensure that you show ALL workings. Graphs NOT required.
n tyn-
A company produces two types of can openers: Model I and Model 2. Each require the use of three
machines: A, B and C. Model I requires 2 hours on machine A, 1 hour on machine B and 1 hour on machine
C. Model II requires 1 hour on machine A, 2 hours on machine B and 1 hour on machine C.The maximum
number of hours available for machine A, B and C are 180, 160 and 100 respectively. The profit on Model I is
$4 and Model Il is $6.
on
Write down the LP model.
Identify the coordinates of the extreme points of the feasible region.
Paragraph
-BIEE
W
99+
Problem 2: IPAT Equation
(i) To comply with the Kyoto Protocol, a country has committed to reduce its emissions
of CO2 eg by 10% over the next ten years. The base year is 2020. For this country, a study
showed that the majority of the emissions of CO2 eg per GDP is due to automobiles using
internal combustion engines. The population is projected to grow by 1.5% per year over
the next ten years. However, the economy (measured by the GDP/capita) of the country
is very much dependent on the geopolitical environment and trading factors. To
estimate the economy (GDP/capita), three growth scenarios were assumed: Low (0.5%
growth per year), Medium (2% growth per year) and High (5% growth per year). Using
the IPAT equation, estimate for the three scenarios how much improvement or
reduction in the emissions of the internal combustion engines will be needed to reduce
the CO2 emissions by 10% in 10 years. Hint: One of the equations is F = P(1 + i)"
A cement factory is located near a river which is also used for training sessions by a team of swimmers. When the factory dumps chemicals in the water, the river cannot be used for swimming. Experts estimate that it would cost $100,000 to install a purifying equipment that would completely eliminate the chemicals from the river. Moving the swimming team to train at a different location would cost $90,000 and thus the purifying equipment would not be necessary.
2.1. Identify the 2 externalities.
2.2. What result (theorem) can be applied to fix these externalities? Why might this theorem work in this case?
2.3. What solution would the two parties choose if the right to a clean river is granted to the swimming team and who would bear the costs of fixing the externality problem?
Chapter 3 Solutions
Engineering Economy (17th Edition)
Ch. 3 - A green (environmentally friendly) office building...Ch. 3 - You are planning to build a new home with...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prepare a composite (weighted) index for housing...Ch. 3 - Prepare a composite (weighted) index for housing...Ch. 3 - Prob. 10P
Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - The capital investment cost for a...Ch. 3 - The capacity of a switch grass-fueled ethanol...Ch. 3 - Prob. 16PCh. 3 - The time to assemble the first unit on a...Ch. 3 - Prob. 18PCh. 3 - For the data below (3.4 .3) a. Find the regression...Ch. 3 - A company that manufactures shuttle cars and mines...Ch. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 28SECh. 3 - Prob. 31CSCh. 3 - Prob. 32CSCh. 3 - Prob. 36FECh. 3 - Prob. 37FECh. 3 - Prob. 38FECh. 3 - Prob. 39FECh. 3 - Prob. 40FECh. 3 - Prob. 41FE
Knowledge Booster
Similar questions
- Air pollution in the country of Gawanza has grown over the last ten years with an increase in manufacturing industries. The government of Gawanza now has a plan to reduce the CO2 emissions into the air by 10% per year over the next 10 years. What do you expect will happen? The marginal cost and marginal benefits to Gawanza of reducing CO2 will be lowest in the last few years of implementing this plan. The marginal cost and marginal benefits to Gawanza of reducing CO2 will be lowest in the last few years of implementing this plan. The marginal cost of reducing CO2 will be the highest and marginal benefits of reducing CO2 will be the lowest in year ten. The marginal cost of reducing CO2 will be the highest and marginal benefits of reducing CO2 will be the lowest in year ten. The marginal cost and marginal benefits to Gawanza of reducing CO2 will be highest in the last few years of implementing this plan. The marginal cost and marginal benefits to Gawanza of reducing…arrow_forward4 Time remaining: 00:09:27 Economics Hurdle rates (minimum required rates of return) are often used by development banks such as the World Bank. Suppose the World Bank hurdle rate is 3%. The World bank is currently evaluating a carbon investment in Brazil that will require 1.35 million dollars given to Brazil now, in return for Brazil setting aside forest land and then returning 2.0 million dollars back to a carbon credit owned by the bank in 10 years. The world bank has already paid 1 million dollars in the past two years to set up a carbon payment fund that can generally be used for these purposes. Will the following investment in this carbon market make sense for the World Bank? A. No because the rate of return is equal to 2.4% B. No, because the opportunity cost of waiting is too high C. Yes, because the ratio of benefits to costs is greater than 3% D. Yes, because the rate of return is equal to 4.0%arrow_forwardHello, Please, I need help solving this problem(10.5). Please give me as many details as you can. Thank you,arrow_forward
- Draw a diagram of the marginal abatement cost curve described by: MAC = 100 - 2E. What is the uncontrolled level of emissions? What is the marginal abatement cost of the 40thunit of abatement? What is the total abatement cost of 40 units of abatement?arrow_forwardSuppose you are an economist at the US Army Corps of Engineers. The Corps is considering whether to build a dam (such as the Kinzua Dam) to prevent flooding on a major river. The Corps asks you to conduct a cost benefit analysis of the project. The dam is expected to be in service for over 100 years, so you can assume the time horizon is essentially infinite. You have the following information: Estimated costs: • $1 billion in construction costs in the first year $10 million in maintenance costs every year, forever Estimated benefits: $20 million in property damage avoided every year, forever • 3 flooding deaths prevented every year, forever 1a. Assume r-3% and the value of a statistical life is $10 million. Calculate the present value of net benefits for the dam. Do you recommend that the project be approved? 1b. Assume the VSL is still $10 million. How big would the discount rate have to be to change your recommendation of the dam's approval? (In other words, find r such that the…arrow_forward What proportion of 2015 greenhouse gas emissions reduce maximizes the difference between total benefits and total cost of emissions reduced?arrow_forward
- 13. The marginal benefit of being able to emit a ton of sulfur dioxide emissions for two firms are given by: MBx = 1000 – (Ex / 2 ) MBY = 600 – (Ey / 3 ) Note that these marginal benefit figures can be interpreted as marginal cost of abating emission down to levels Ex and Ey. Government regulators want to reduce total sulfur dioxide emissions to a total of 1800 tons. a) If the government imposes the same standard of 900 tons maximum emissions on both firms what would be the total cost of abatement (calculated as the aggregated marginal benefits forgone)? b) If the government distributed 900 tradable pollution permits (one ton each) to each firm what would be the final allocation of these permits after the firms trade them? What would be the total cost of abatement in this latter case?arrow_forwardTrue or False[explain] A)The lower the discount rate used in allocating future resources, the more emphasis we place on current consumption over conservation for future generations. (Your explanation should include the formula for present value using the discount rate.) B)Renewable energy sources are expensive relative to nonrenewable ones, and we do not have the infrastructure available to provide for the world’s energy using sources such as wind, water, and solar power. This means adoption of renewable energy has been slow and will continue to be slow in the near future.arrow_forwardWhat does NASA think will happen if we stopped emitting greenhouse gases today? a) Global temperatures would stabilize to pre-industrial revolution levels in one year b) Global warming would continue to happen for at least several more decades c) The globe would go into a gradual cooling period and would stabilize at pre-industrial revolution temperature levels in about 5 years d) The globe would go into a rapid cooling period and we would be in danger of mass extinction during the next decade due to a global ice age e) This is a trick question since NASA is the space agency and only deals with outer space and other planets; they do not study the eartharrow_forward
- Ken’s firm is committed to reducing greenhouse gas by 10 tons per year. The firm’s cost of abating a ton of carbon is shown below: Quantity of Carbon Abated in tons Marginal Cost of Carbon Abatement 1 $3 2 $4 3 $5 4 $6 5 $7 6 $8 7 $9 8 $10 9 $11 10 $12 Ken also has the option to instead pay for a reforestation project that offsets a ton of carbon. Each reforestation project cost $7. What is the best combination of production abatement and reforestation abatement for Ken? How much money does Ken save byusing the reforestation abatement?arrow_forward3. In a waterflooded mature oil field, a large scale polymer-flooding project is evaluated with a small-scale pilot-test being considered to make a decision. Without the pilot test, the existing waterflooding will continue with an estimated NPV of $36 MM USD. Historically, polymer-flooding pilot tests resulted with promising results in 65% of the cases, and results are representative for large-scale flooding in 70% of the cases (can be considered as right data are collected). • In the case of a promising pilot-test, large scale project will have an NPV of $80 MM, but if the pilot test is not representative (is wrong), this will result in a loss of $40 MM USD. • In the case of a not-promising pilot-test, existing waterflood will continue as it is, with an NPV of $36 MM USD. Calculate the value-of-information of the pilot test, by considering Lohrenz's Method.arrow_forwardIt is well established that indoor air quality (IAQ) has a significant effect on general health and productivity of employees at a workplace. A study showed that enhancing IAQ by increasing the building ventilation from 5 cfm (cubic feet per minute) to 20 cfm increased the productivity by 0.25 percent, valued at $90 per person per year, and decreased the respiratory illnesses by 10 percent for an average annual savings of $39 per person while increasing the annual energy consumption by $6 and the equipment cost by about $4 per person per year (ASHRAE Journal, December 1998). For a workplace with 120 employees, determine the net monetary benefit of installing an enhanced IAQ system to the employer per year.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education