EBK ENGINEERING ECONOMY
16th Edition
ISBN: 9780133819014
Author: Koelling
Publisher: YUZU
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Chapter 5, Problem 25P
A simple, direct space heating system is currently being used in a professional medical office complex. An upgraded “variable air-volume system” retrofit can be purchased and installed for $200,000(investment cost). Its power savings in the future will be 500,000 kilo-Watt hours per year over its estimated life of 8 years. The cost of electricity is $0.10 per kilo-Watt hour. If the firm’s cost of capital is 12% per year and the residual value of the system in 8 years is $20,000, should the new system be purchased? Use the present worth method. (5.3)
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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3
apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added
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Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's
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State the condition for a consumer's utility maximizing choice and illustrate graphically.
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Quantity
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Firm A
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1
60
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49
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85
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96
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Does each of these firms experience economies of scale or diseconomies of scale? Explain your answer
with necessary calculations.
Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer.State the condition for a consumer's utility maximizing choice and illustrate graphically.
Chapter 5 Solutions
EBK ENGINEERING ECONOMY
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