A university spent $1.5 million to install solar panels atop a parking garage. These panels will have a capacity of 200 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 1,468.26 2,936.51 3,230.16 4,111.11 If the solar panels can operate only for 2,643 hours a year at maximum, the project Continue to assume that the solar panels can operate only for 2,643 hours a year at maximum. break even. In order for the project to be worthwhile (1.e., at least break even), the university would need a grant of at least,

A university spent $1.5 million to install solar panels atop a parking garage. These panels will have a capacity of 200 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 1,468.26 2,936.51 3,230.16 4,111.11 If the solar panels can operate only for 2,643 hours a year at maximum, the project Continue to assume that the solar panels can operate only for 2,643 hours a year at maximum. break even. In order for the project to be worthwhile (1.e., at least break even), the university would need a grant of at least,

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 4E

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The annual market marginal demand curve for electricity is MB=400-1.5Q. The annual marginal cost curve is MC=50+Q. The government is considering whether to build one of three plants. The first will have a maximum production capacity of 50 units of Q; the second a maximum capacity of 100 units, and the third, a maximum capacity of 200 units. Plants need to be operated at maximum capacity; otherwise, excess investment cost (not depicted in the diagram) will be incurred. Given this background: What is the annual benefit of the 50-unit plant? What is the annual cost? What is the annual net benefit?
Within its first three years, the 2012 Chevy Volt fell in value 62 percent to $12,997 in 2015. And a 2012 Nissan Leaf fell in value 66 percent to $10,220. That’s −22 percent a year, whereas the typical gasoline car depreciates −24, −15, and −12 percent its first three years (51 percent) for a −17 percent average per year. Indeed, at the extreme, a Honda Accord is worth fully 64 percent after three years (−12 percent average per year). Clearly, the steep decline in gasoline prices in 2014 contributed to electric-powered vehicles depreciating recently much faster than gasoline powered vehicles. But hybrid-electric vehicles such as the Nissan Leaf and Chevy Volt and all-electric vehicles such as the Chevy Bolt face another problem as well? 1.) What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If that issue affected resale value at year 5, would that affect perceived value-in-use? How exactly?
The cost of reducing lead contamination of water for BigManufacture Inc. is shown in the table below. BigManufacture Inc currently releases lead in to the local waterways at a concentration of 5 parts per billion. The government regulations sets a limit to the lead pollution at 2 parts per billion accompanied by a $30,000 fine per year for each part per billion beyond the 2 part limit. What is BigManufacture Inc likely to do? Reduction of Lead Cost By 1 part per billion $20,000/year By 2 parts per billion $45,000/year By 3 parts per billion $80,000/year Group of answer choices Reduce lead pollution by 1 part per billion. Reduce lead pollution by 2 parts per billion. Reduce lead pollution by 0 part per billion. Reduce lead pollution by 3 parts per billion.
Suppose the costs of an environmental pollution-control program are expected to be equal to $80 per year, and that benefits will be $50 per year for 50 years, then $150 per year thereafter. At a discount rate of 4 percent, what are the net benefits of this program for the next 100 year? What would the net benefits be at a discount rate of 2 percent? Comment on the difference.
Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake?
Consider a nonrenewable resource that can be consumed either today (period 1) or tomorrow (period 2) and has a finite supply of 4 units. Assume the inverse demand for the resource in both periods is: P_1 = 150 - 25Q_1 P_2 = 150 - 25Q_2 Assume the marginal cost of extracting the resource is constant at $50 and the social discount rate is 15 percent (r = .15). What is the efficient level of consumption in period 1? Please report your answer out to at least two digits (e.g., 3.24).
Assume Allergan, Inc. is facing a capacity constraint in manufacturing Botox®. Analytically, this implies its marginal cost curve is extremely steep. As Botox® is oftentimes used for cosmetic reasons, it is reasonable to assume consumers have quite elastic demand curves. Hypothetically, assume a forthcoming study will highlight the safety of Botox® for cosmetic procedures. Given this potential study, where should Allergan, Inc. focus its strategic resources? a. Operations, specifically finding ways to lower costs in an effort to justify a price increase. b. Staffing, specifically preparing to significantly increase its staff to prepare for a large increase in the number of units of Botox® sold. c. Marketing/Pricing, specifically preparing to significantly raise the price for Botox®.
Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. n the table below are the marginal abatement costs of two firms. Note that an entry in the table indicates the cost of reducing emissions by one unit from the previous level. For example, $104 is the additional abatement cost for Firm 1 to reduce its emissions from 3 tons to 2 tons, and $40 is the cost for Firm 2 to reduce its emissions from 7 tons to 6 tons. 1.In an unregulated environment each firm produces 10 tons of emissions (20 tons total). Using the table above, what emissions levels (i.e., emissions standards) would you assign if you wanted to limit aggregate emissions to 7 tons in a cost-effective manner? Firm 1’s emissions level ________________ Firm 2’s emissions level ________________ 2.Given the emissions levels from Question 1, calculate the total abatement cost for each firm? Firm 1’s total abatement cost ________________…
The oil industry realizes their mistake and would now like to consider future generations. How much oil would they consume now, and how much would they conserve for the future generation? Assume the marginal net benefit you calculated in part b stays constant for the present and future generation, total oil available is 20 million barrels (Q1 + Q2 = 20), and use a discount rate of 3% with the future generation in 24 years (n=24).
NutraSweet Aspartame is a low-calorie, high-intensity sweetener known by Monsanto’s brand name, NutraSweet. It was the key to the success of Diet Coke and Diet Pepsi in the 1980s. NutraSweet made billions of dollars, yielding very high profits. Such profits usually attract entry, but in this case entry was barred by a patent on the sweetener and because the process of creating the sweetener was expensive and difficult. Monsanto had a distinct capability—its monopoly. It had also created another strategic asset—the NutraSweet brand name as represented by its trademark ‘swirl.’ The problem was that Monsanto’s patent was about to expire. As a result, the Holland Sweetener Company began building an aspartame plant in Geleen, the Netherlands, to challenge Monsanto’s hold on the aspartame market. Holland Sweetener was a joint venture between the Japanese Tosoh Corporation and DSM (Dutch State Mines). What did Monsanto do? Why? What did Holland Sweetener do? Why?
Jiffy-Pol Consultants is paid $1,000,000 for each percentage of the vote that Senator Sleaze receives in the upcoming election. Sleaze’s share of the vote is determined by the number of slanderous campaign ads run by Jiffy-Pol according to the function S = 100N/(N + 1), where N is the number of ads. If each ad costs $4,900 approximately how many ads should Jiffy-Pol buy in order to maximize its profits? A) 2,853. B) 1428. C)98 D) 477.
Most public utilities (gas, electricity, water, and local telephone companies, for instance) are subject to rate of return regulation, under which a firm is allowed to choose its price, subject to its proving that it is not earning too much money. Typically, the firm is allowed to cover its expenditures for labor and material exactly and to earn a "fair" rate of return on its capital investment. Can you think of any problems with this sort of regulatory scheme? In particular, what do you think that this plan does to the firm's incentives to substitute capital for labor?