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21. An oil transmission company uses only two inputs, pipelines and workers. Its output is the volume of oil transmitted (V), which is determined by the area of the cross section (3.14r2) and the length of pipeline (h). Thus, V = 3.14r¹h, where r is radius of the pipeline and h is the total length of the pipeline. The cost of building the pipeline depends on the surface area of the pipeline S, where S = 6.28th, which costs $100 per S. Besides, cost of hiring labour for managing the pipeline depends on the length of the pipeline, which costs $10 per h. A standard pipeline radius r is 0.5 metre. (a) If both r and h double, output (V) will increase by how much? (b) If both r and h double, total cost (C) will increase by how much? (c) Based on (a) and (b), are there economies of scale?

21. An oil transmission company uses only two inputs, pipelines and workers. Its output is the volume of oil transmitted (V), which is determined by the area of the cross section (3.14r2) and the length of pipeline (h). Thus, V = 3.14r¹h, where r is radius of the pipeline and h is the total length of the pipeline. The cost of building the pipeline depends on the surface area of the pipeline S, where S = 6.28th, which costs $100 per S. Besides, cost of hiring labour for managing the pipeline depends on the length of the pipeline, which costs $10 per h. A standard pipeline radius r is 0.5 metre. (a) If both r and h double, output (V) will increase by how much? (b) If both r and h double, total cost (C) will increase by how much? (c) Based on (a) and (b), are there economies of scale?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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21. An oil transmission company uses only two inputs, pipelines and workers. Its output is the volume of oil transmitted (V), which is determined by the area of the cross section (3.14r2) and the length of pipeline (h). Thus, V = 3.14r¹h, where r is radius of the pipeline and h is the total length of the pipeline. The cost of building the pipeline depends on the surface area of the pipeline S, where S = 6.28th, which costs $100 per S. Besides, cost of hiring labour for managing the pipeline depends on the length of the pipeline, which costs $10 per h. A standard pipeline radius r is 0.5 metre. (a) If both r and h double, output (V) will increase by how much? (b) If both r and h double, total cost (C) will increase by how much? (c) Based on (a) and (b), are there economies of scale?
Transcribed Image Text:21. An oil transmission company uses only two inputs, pipelines and workers. Its output is the volume of oil transmitted (V), which is determined by the area of the cross section (3.14r2) and the length of pipeline (h). Thus, V = 3.14r¹h, where r is radius of the pipeline and h is the total length of the pipeline. The cost of building the pipeline depends on the surface area of the pipeline S, where S = 6.28th, which costs $100 per S. Besides, cost of hiring labour for managing the pipeline depends on the length of the pipeline, which costs $10 per h. A standard pipeline radius r is 0.5 metre. (a) If both r and h double, output (V) will increase by how much? (b) If both r and h double, total cost (C) will increase by how much? (c) Based on (a) and (b), are there economies of scale?
21. An oil transmission company uses only two inputs, pipelines and workers. Its output is the volume of oil transmitted (V), which is determined by the area of the cross section (3.14r2) and the length of pipeline (h). Thus, V = 3.14r¹h, where r is radius of the pipeline and h is the total length of the pipeline. The cost of building the pipeline depends on the surface area of the pipeline S, where S = 6.28th, which costs $100 per S. Besides, cost of hiring labour for managing the pipeline depends on the length of the pipeline, which costs $10 per h. A standard pipeline radius r is 0.5 metre. (a) If both r and h double, output (V) will increase by how much? (b) If both r and h double, total cost (C) will increase by how much? (c) Based on (a) and (b), are there economies of scale?
Transcribed Image Text:21. An oil transmission company uses only two inputs, pipelines and workers. Its output is the volume of oil transmitted (V), which is determined by the area of the cross section (3.14r2) and the length of pipeline (h). Thus, V = 3.14r¹h, where r is radius of the pipeline and h is the total length of the pipeline. The cost of building the pipeline depends on the surface area of the pipeline S, where S = 6.28th, which costs $100 per S. Besides, cost of hiring labour for managing the pipeline depends on the length of the pipeline, which costs $10 per h. A standard pipeline radius r is 0.5 metre. (a) If both r and h double, output (V) will increase by how much? (b) If both r and h double, total cost (C) will increase by how much? (c) Based on (a) and (b), are there economies of scale?
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