Basics Of Engineering Economy
Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
Textbook Question
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Chapter 4, Problem 1P

State two conditions under which the do-nothing alternative is not an option.

Expert Solution & Answer
Check Mark
To determine

Related to do-nothing option.

Explanation of Solution

When there is a requirement to select one of the qavaiolable option, then do-nothing opption cannot be used. When the cash flow of the existing options are only cost, then dop-nothing option will not be used.

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3. Consider the market for paper. The process of producing paper creates pollution. Assume that the marginal damage function for pollution is given by: MDF = 3E where damages are measured in dollars and E is the level of emissions. Assume further that the function describing the marginal abatement cost of emissions is given by MAC 120-E where benefits are measured in dollars and E is the level of emissions. a. Graph the marginal damage function (MDF) and the marginal abatement cost function (MAC). b. What is the unregulated level of emissions Eu? What is the social welfare of this emissions level? c. Assume an existing emission quota limits emissions to E = 60. Show on the graph why this policy is inefficient. What is the deadweight loss caused by this policy?
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Basics Of Engineering Economy

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