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Project 1: Questions on Lesson 1-5
Question 1.
Referring to the table below, from a financial standpoint, Mark would want to go with Option 1, replacing the engine and selling it afterwards, while incurring a loss of $45,000. We can conclude this by looking at the marginal benefits of choosing to replace the engine ($350K) and subtracting it from the sale price without replacing the engine ($220K), resulting in a $130K (350 – 220 = 130) marginal benefit. The next step would be to consider the marginal cost of taking the additional step of fixing the engine. If he chooses to fix the engine, then he would incur a cost -$100K; however, subtracting the marginal cost from the marginal benefit, we can see that it would still be worthwhile for Mark to replace the engine on the plane in order to receive a marginal net gain of $30K (130 – 100).
Action
Option 1 – Replaces engine
Option 2 – Does not replace engine
Buys old plane
-295,000
-295,000
Fixes Engine
-100,000
N/A
Sells Plane
+350,000
+220,000
Net Total
-45,000
-75,000
2
Question 2.
“Victorians rush to buy EVs in last days before state government dumps rebate scheme”
– The Guardian
The article that I chose relates to “Principle #4: People Respond to Incentives”. The story focuses on the Victorian government in Australia rescinding its $3000 electric vehicle rebate one year earlier than expected. The anticipation of the removal led to 1,300 Victorians rushing to claim the rebate before the program was pulled indefinitely, with roughly 60 claims a day since the announcement in early June. This government incentive is the prime example of the effects that incentives have on consumers that induces a rational person to act. The article goes on to state how and why the government implemented this rebate, explaining that they served two purposes: reduce carbon emissions in Australia by 2030 and achieve a goal of 50% of car sales being electric by 2050. However, a researcher from RMIT university argued that with this early removal of the electric car rebate, the government could risk dissuading people from purchasing electric vehicles as electric vehicle sales currently makeup less than 10% of all car sales, which is still significantly short of the 50% target by 2050. He also goes on to further suggest that governments should create disincentives to help discourage drivers from buying gasoline-powered vehicles, likely by adding fees and taxes on top of the market price.
Overall, I think this article does a great job at showing the importance of government incentives/disincentives to help influence rational consumers to change their spending habits and adopt new trends. The article also explains in detail the purpose of the incentives, the goals it hopes to reach, and the consequences of removing incentives from the market. Link: https://www.theguardian.com/australia-news/2023/jun/29/victorians-rush-to-buy-
evs-in-last-days-before-state-government-dumps-rebate-scheme
Question 3.
3
a)
With the implementation of an electric-only lane, it would cause electric vehicle
sales to increase at a higher rate. This would be the case due to rational consumers seeing the benefits of quicker commute times as outweighing the cons of owning an electric vehicle. b)
Two externalities can result from a implementing an electric-only lane. In terms of positive externalities
, this would benefit society, as it would help reduce carbon emissions and pollutants into the air. This would be done theoretically at
no cost to bystanders and will help create a positive effect on the environment. In terms of negative externalities
, one possible outcome is the backlog and traffic congestion that it could cause on the non-electric lanes, seeing that we are removing one lane of traffic and only giving access to a much smaller group of people (electric vehicle owners). In the short run, this will cause lots of congestion and long traffic times for other drivers consequently for simply owner a gas-powered car. It could also be argued that with the increase in traffic in other lanes, it could inadvertently also affect the environment in a negative way, as more bumper-to-bumper traffic and idling could lead to pollutants in the air.
c)
It would be a normative statement, as the statements talks about what they ought to do
. Evaluating this statement, we would have to not only look at data and facts, but we would have to consider non-data related factors such as ethics, morality, and even political philosophy.
Question 4.
4
Question 5.
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Question
Asked Jun 23, 2020
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Refer to the accompanying table below. The marginal cost of the 4tn unit of activity is:
Units of
Activity
Total Cost
Total Benefit
$0
$0
1
$2
$12
2
$6
$22
$12
$20
3.
$30
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$40
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QUESTION 16
Assume that we have the following two alternatives to choose from:
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• Option B: accounting profit = 75K
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b. 25K
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A) 10.05
B) 30.50
C) 73.49
D) 14.20
E) 0.02
F) 261.25
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QUESTION TWO (2)
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3
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5
$7
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$8
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100
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50
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Final grade
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Changes are inevitable in any project's or
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among customers and professional groups. The costs of this training program include all
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by B(Q) = 100Q2Q² and C(Q) = 100, where Q represents the amount of hours each
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To determine the value of a bridge to members of a community, why is asking them directly not a reliable way of measuring the benefits and costs?
Question 11 options:
Those who stand to gain have an incentive to tell the truth.
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Those who stand to lose have an incentive to exaggerate their true costs.
Not everyone asked will be using the bridge.
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speed of a computer's CPU and its benefits and costs. Assume
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CPU speed is the only source of variation), and only the CPU
speeds listed in the table are available for purchase.
CPU
Total
Marginal
Total
Marginal
GHz
Benefit
Benefit
Cost
Costs
2.0
$1,000
$900
2.5
$1,400
$ 100
3.0
$300
$1,200
3.5
$1,900
$ 1,500
4.0
$2,000
$ 400
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computer is
O $400.
O $300.
$200.
O $100.
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A)
$440.
B)
$200.
C)
$166.
D)
$0.
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During your first month as an employee at Greenfield Industries (a large drill-bit manufacturer), you are asked to evaluate alternatives for producing a newly designed drill bit on a turning machine. Your boss' memorandum to you has practically no information about what the alternatives are and what criteria should be used. The same task was posed to a previous employee who could not finish the analysis, but she has given you the following information:
An old turning machine valued at $350,000 exists (in the warehouse) that can be modified for the new drill bit. The in-house technicians have given an estimate of $40,000 to modify this machi, and they assure you that they will have the machine ready before the projected start date (although they have never done any modifications of this type). It is hoped that the old turning machine will be able to meet production requirements at full capacity. An outside company, McDonald Inc., made the machine seven years ago and can easily do the…
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During your first month as an employee at Greenfield Industries (a large drill-bit manufacturer), you are asked to evaluate alternatives for producing a newly designed drill bit on a turning machine. Your boss’ memorandum to you has practically no information about what the alternatives are and what criteria should be used. The same task was posed to a previous employee who could not finish the analysis, but she has given you the following information:
An old turning machine valued at $350,000 exists (in the warehouse) that can be modified for the new drill bit. The in-house technicians have givenan estimate of $40,000 to modify this machine, and they assure you that they will have the machine ready before the projected start date (although they have never done any modifications of this type). It is hoped that the old turning machine will be able to meet production requirements at full capacity. An outside company, McDonald Inc., made the machine seven years ago and can easily do the…
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Problem 4/
A firm produced two types of television x of type A and y of type B per year (in thousands). If the revenue and
cost equations for the year are (in million dollars)
R(x, y) = 3x+6y
C(x, y) = x2 + y2-3x-2y-8
Determine how many of each type of television should be produced per year to maximize profit?
What is the maximum profit?
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The following figure shows the incremental cost of two units and the marginal cost (old)
of the system, when all constraints are met. If both units were dispatched at their
minimum values, what would be the marginal cost of the new system (new)?
Select one:
a
The incremental cost of unit 1
Ob. Approximately 46.3 $/MWh
S/MWh
49
48
C1=45+0.02Pg1
47
46
45
44
C2=43+0.006Pg2
I
C.
The incremental cost of unit 2
0
100
200
300
400
500-
600
MW
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Chapter 3: Market Study
This plant design, entitled “IIVSDROP: The First Ear Dropper Solution Manufacturing Plant in the Philippines” considers a 30-year period of study, starting 2021, after finishing its construction by 2020. All projections, and interest rates set by the company shall be evaluated within this 30-year period. The inflation rate shall not be included in the computation and a minimum attractive rate of return is set at 20%.
Chapter 4: Products
Our company produces ear dropper solution which can be sold for PHP. 125.00 per bottle. Annually, the company can produce 1000 pallets of the product. Each pallet is stacked with 14 layers and each…
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- arrow_forward Question Asked Jun 23, 2020 1 views Management of Ben Services identified two groups of individuals that would be interested in the vacation package consisting of room and board and/or entertainment. The maximum amount that group 1 is willing to pay for room and board is GHC 2500 and for entertainment is GHC 500. For group 2, the maximumamount they are willing to pay for room and board is GHC 1800 and forentertainment is GHC 750. Although Ben is not able to identify members of either group, it does know that each group values the components of the package differently. Assuming there are an equal number of members in each group and that the total membership in each group is a single individual. If the marginal cost of providing the service (room and board and/or entertainment) to each group is GHC 1000. i. If AG Travel and Tour wants to charge a package price, what is the highest price it can charge? ii. What profit will AG Travel and Tour make if it…arrow_forward3. You have developed a self-study certification system for those who need credit hours for recertification by your state’s social welfare office. The system operates at virtually no cost, i.e., there is no marginal cost. A marketing research team has assembled the following sales information. You are researching the options for pricing the courses. Your goal is to achieve maximum revenue to establish funding to maintain and update the system to reflect annual policy changes in licensing requirements. Complete the calculations for Total Revenue by determining how many customers will purchase at each of the segment prices. Online Self Certifications for Social Work License Certification in Online Counseling Certification as a Group Home Counselor Bundle Customers TR Counseling TR Group Home TR Bundle Segment 1 1000 $190 a $70 e $260 4a Segment 2 1000 $150 b $90 f $240 4b…arrow_forwardRefer to the accompanying table below. The marginal cost of the 4tn unit of activity is: Units of Activity Total Cost Total Benefit $0 $0 1 $2 $12 2 $6 $22 $12 $20 3. $30 4 $36 $30 $40 6 $42 $42 7 $56 $43arrow_forward
- Assume you are an engineer working for a chemical production company. You are on the technical team that is responsible for deciding what to do about the dangerous chemical that your company is using to produce its best-selling chemical product. Recent reports have just made known the dangers of this chemical, and the company now needs to decide how to proceed. There are several options to consider: stop producing the harmful product altogether and take a hit on total profits; continue to make the product and sell it, like nothing's wrong, since the federal government has not cracked down. You could also spend money and engineering efforts in R&D to develop a safe chemical that would take its place. There is no guarantee that this would happen any time soon, but the scientists think it is realistically possible. To make matters worse, your biggest competitor produces this harmful product off-shore and is not hampered by the US regulations. If you stop producing this product…arrow_forwardQUESTION 16 Assume that we have the following two alternatives to choose from: • Option A: accounting profit = 100K • Option B: accounting profit = 75K What is the economic profit if we select option A? a. 100K b. 25K c. 75K d. There is not enough information to answer the questionarrow_forwardOver the course of a customer’s lifetime of reading a weekly magazine priced at $4 per issue, what is the value of the magazine? Assume a customer acquisition cost of $12, a retention cost of $0, printing and distribution costs of $1, an annual retention rate of 77% and an annual discount rate of 2.6%. Assume that price and non-marketing variable costs remain constant over the customer’s lifetime of reading the magazine. Options: A) 10.05 B) 30.50 C) 73.49 D) 14.20 E) 0.02 F) 261.25arrow_forward
- Consider again Steve: Steve collects old synthesizers. One he bought a few years back for $3000 he's decided to sell. Over the time he owned it, Steve did $250 in repairs and renovations. In preparing to sell the synthesizer, he's told by a source he considers 100% reliable that he could sell it for $3250 as it currently is. If, however, he is willing to pay $400 for some additional cosmetic repairs, he's told he could definitely get $3800 instead. Steve repair the synth before selling because marginal cost is than marginal benefit. O should not; greater O should; less O should not; less O should; greater MacBook Air 吕口 F3 F4 F5 F6 F7 F8 2$ & 4 8 9. R Y 6arrow_forwardYou and two friends find yourself craving a fresh pizza while preparing for the final exam on the engineering economy. You can't spend time picking up the pizza and you have to have it shipped. 'Pick-up-Sticks' offers 1-1/4-inch thick (including toppings), 20-inch square pizza with your option of two toppings for $15 plus 5 percent sales tax, and $1.50 delivery fee (no sales tax on delivery price). "Fred's" offers Sasquatch round, deep-dish, which is 20 inches in diameter. It is 1-3/4 inches thick, contains two toppings, and costs $17.25 plus sales tax of 5 percent and free delivery. (1) What is the problem in this situation? Please state that clearly and specifically. (2) Apply the seven principles of engineering economy systematically to the problem you set out in Part (1) (3) If your common unit of measurement is dollars (i.e., cost), what is the better value for having a pizza based on the criterion of reducing cost per unit volume? (4) What other criteria might be used to select…arrow_forwardQUESTION TWO (2) Assume you are managing a one-year project and have listed the project earned management value as below. Note that PV is the planned value, EV is the earned value, AC is the actual cost, and BAC is the budget at completion. PV = $25,000 EV = $22,000 AC = $27,000 BAC = $122,500 Review the project and answer the following to find your project status. a. Calculate the following for the project. i. Cost variance ii. Schedule variance iii. Cost performance index (CPI) iv. Schedule performance index (SPI) b. Discuss the project status whether it is ahead of schedule or behind schedule and whether it is under budget or over budget. c. Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned? d. Use the SPI to estimate how long it will take to finish this project.arrow_forward
- Suppose the cost of purchasing euros (EUR) and Canadian dollars (CAD) at the airport are given by the following bid / ask price: EUR 1 = USD 1.32 / 1.47 CAD 1 = USD 0.85 / 0.97 How much USD is required to purchase EUR 2,000? How much USD is required to purchase CAD 1,500? How much USD will you get if you’d like to sell EUR 500 to the airport’s currency exchange store? How much USD will you get if you’d like to sell CAD 500 to the airport’s currency exchange store? Calculate the percent spread or margin for USDEUR. Calculate the percent spread or margin for USDCAD.arrow_forwardRead the following article, which introduces the concepts of expected value and optimal decision making. Then answer the question that follows. EXPECTED VALUE AND OPTIMAL DECISION MAKING, BY THE APLIA ECONOMICS CONTENT TEAM As an alternative to raising property taxes in order to increase revenue, the village of Port Chester, New York, recently increased parking meter rates by 25% and also raised parking fines. According to an article from the lohud.com news site (Gabriel Rom, "Port Chester Increases Parking Costs, Fines," lohud.com, May 2, 2017), officials are hoping that the increased parking costs will yield an additional $500,000 in revenue for the village. Although in the past drivers may have been more willing to risk parking illegally, the optimal behavior for Port Chester drivers may have changed as the cost of a ticket has risen. Undoubtedly, some motorists will continue to take certain "gambles," perhaps risking a ticket for illegal parking in exchange for the benefit of saved…arrow_forward(2.3) You are part of a sustainability consulting team tasked with evaluating the feasibility of retrofitting an old office building to achieve net-zero energy status. The goal is to reduce the building's carbon footprint to zero by enhancing its energy efficiency and installing renewable energy systems. Your task is to calculate the Benefit-Cost Ratio (BCR) of this retrofitting project to assess its financial viability. You know the following information about this project: Total cost of retrofitting measures: $800,000, including: High-efficiency HVAC system: $250,000 • Window upgrades: $150,000 Thermal insulation: $200,000 Solar PV system: $200,000 Grants and subsidies for green retrofitting: $100,000 Expected annual energy cost savings: $75,000 Additional annual savings (maintenance, etc.): $20,000 Expected lifespan of retrofitting measures: 25 years Time value of money rate: 7% Show your calculation process about BCR for the cost analysis.arrow_forward
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