EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 6, Problem 4ST
To determine

Calculate the present value.

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A firm makes a product whose contribution per unit is $2,000 and takes 100 hours to make (machine time). A component of this product has a marginal cost of $400 and takes 10 hours to make (machine time). This component could be purchased from an external supplier. Assuming the firm is working at full capacity, what is the maximum price that the company is willing to pay to buy the component from the external supplier?
Complete all of the following definitions
Show all work. Draw graphs to explain your answers. The correct answers will include areas on the graph and dollar values. Suppose a chemical factory discharges waste products into a river resulting in significant damages to a local fishery. The marginal damage to the fishery (measured in terms of the value of lost fish stocks) is represented by the equation:MDC = 10E The chemical factory can reduce its effluent flows by treating its waste products. Its marginal abatement cost (MAC) function is given by the equation: MAC = 1,200 - 5E. What level of emissions will occur if the chemical factory is not regulated? What would the total abatement costs for the chemical factory be if emissions are controlled and reduced to zero?   If no liability laws are in place, what damages will the chemical factory inflict on the fishery?  (Hint: find TDC)               If the government puts in place a liability law that requires the chemical factory to compensate the fishery for the damages it causes,…
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