A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 200 kilowatts (kW) and have a lifeexpectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that themarginal 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?O 4,228.58O 1,409.53O 3,523.82O 5,285.73If the solar panels can operate only for 3,171 hours a year at maximum, the project would notbreak even.Continue to assume that the solar panels can operate only for 3,171 hours a year at maximum.In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least

Breakeven: In economics break even is a point where the total cost is equal (even) to the total…

Answered: A university spent $1.8 million to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose you have a production technology that can be characterized by a learning curve. Every time you increase production by one unit, your costs decrease by PhP5. The cost of the first unit you produce is PhP65. There was a proposal for you to work on a project for five units, what is your break-even price? Suppose that if you get the contract, you estimate that you can win another project for three more units. Now, what is your break-even price for those three units?
Consider the following two-period model of dynamically efficient extraction of a non-renewable natural resource. The constant social marginal cost of extraction is 40 in each period and the total stock of the resource is Q = 300 units. Moreover, the social marginal benefit is MB(Qt) = 200 Qt, where Qt is the quantity of resource extracted in period t, for t = 0; 1. The discount factor is 0:8. What is the marginal user cost (or scarcity rent) of the resource in each period?
In the Faustmann model, what factors determine the marginal benefits and marginal costs of allowing a stand of trees to continue to grow for another year, and therefore the dynamically efficient harvest interval?
Consider a firm with marginal costs of MC=70+2Q. The firm is considering investing in research and development to find a production process that will allow it to make its output using less raw material inputs. The new production process is expected to lower the firm's marginal costs to MC=(70-10)+2Q. The firm is currently producing 60 units per year and plans to keep its output level the same after it innovates. Calculate the annual incentive for the firm to make the research and development investment.
The biological relationship between the growth for the fish population and the size of the fish population is g = 12S(1 - S/4) where g is the growth of the fish population and S is the size of the population. The size of the harvest is a function of the amount of human effort expended b = 3ES where E is the level of effort. Market price of fish per unit is $100 and a constant marginal cost of effort is $40. We can derive the free-access equilibrium effort level Ef by setting the net benefits function equal to zero. Then, E f = in one decimal place. Hint: Write the number
The world's total petroleum reserve is estimated at 1.5 x 1022 J. At the present rate of consumption, 6.027 x 1017 J/day, how long would it take to exhaust the supply (in years)?
Kenji lives in Mississauga and runs a business that sells pianos. In an average year, he receives $723,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $423,000; he also pays wages and utility bills totalling $267,000. He owns his show room; if he chooses to rent it out, he will receive $2,000 in rent per year. Assume that the value of this show room does not depreciate over the year. Also, if Kenji does not operate this piano business, he can work as a financial advisor, receive an annual salary of $20,000 with no additional monetary costs, and rent out his show room at the $2,000 per year rate. No other costs are incurred in running this piano business. Identify each of Kenji's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost The wages and utility bills that Kenji pays The salary Kenji could earn if he worked as a financial advisor The rental income Kenji could receive if he…
A developer of high-priced executive tract homes has offered you $1000 per acre for the 500 acres of Vermont countryside you inherited from your Aunt Prudence. The Vermont Land Trust makes a counter offer of $500 per acre for the development rights to the land. By selling off the development rights only, you get to keep title to the land, and can use it for commercial purposes so long as these uses don't involve clearing the land of its forest. You know that you can continue Prudence's maple sugar operations, and you understand that you can probably collect hunting fees annually from private individuals wishing to use your land. How much would you and your heirs in perpetuity have to collect annually as a result of these low impact uses (maple sugaring and hunting) in order for you to agree to sell the development rights to the Vermont Land Trust, assuming that you wish to maximize your revenues from Aunt Prudence's estate, and that your discount rate is 5%? Please format your answer…
PROBLEM #3 An auto parts manufacturer uses a production process for one of its parts that has a long- run production function as follows: q=20K²L, where L measures the number of labor hours and K measures the number of rental hours for the machine used in the production process. The machine can be rented for $90 per hour; the hourly wage for workers is $15. The manufacturer has a production budget of $23,220 for this type of part. If the manufacturer's goal is to maximize output, subject to the production budget, find the output-maximizing levels of capital and labor the manufacturer will choose.

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