Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 6, Problem 36P
To determine
Calculate the minimum monthly water bill.
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You have room for up to two fruit-bearing trees in your garden. The fruit trees that can
grow in your garden are either mango, orange, or guava. The cost of maintenance is TK
100 for a mango tree, TK 70 for an orange tree, and TK 120 for a guava tree. Your food
bill will be reduced by TK 130 for each mango tree you plant, by TK 145 for each guava
tree you plant, and by TK 90 for each orange tree you plant. You care only about your
total expenditure in making any planting decisions.
(a) What is the set of possible actions and related outcomes?
(b) What is the payoff of each action/outcome?
(c) Draw the associated decision tree. What will a rational actor choose?
(d) Imagine that the reduction in your food bill is half for the second tree of the same
kind. That is, the first mango tree still reduces your food bill by TK 130, but if you
plant two mango trees your food bill will be reduced by TK 130 + TK 65 = TK 195,
and similarly for guava and orange trees. What will a rational actor…
A car rental agency is considering a modification in its oil change procedure. Currently, it uses a Type X filter, which costs $4.75 and must be
changed every 9,000 miles along with the oil (5 quarts). Between each oil change, one quart of oil must be added after each 500 miles. The
proposed filter (Type Y) has to be replaced every 6,000 miles (along with 5 quarts of oil) but does not require any additional oil between filter
changes. If the oil costs $1.19 per quart, what is the maximum acceptable price for the Type Y filter?
Choose the correct answer below.
A. The maximum acceptable price for the Type Y filter is $29.34.
B. The maximum acceptable price for the Type Y filter is $14.67.
C. The maximum acceptable price for the Type Y filter is $40.45.
OD. The maximum acceptable price for the Type Y filter is $22.01.
PNG’s managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5000 and total variable costs are $4000, based on production of 400 units. The following values may be useful.
1n (0.2) = –1.609
1n (1.5) = 0.405
1n (0.5) = –0.693
1n (4000) = 8.294
1n (0.8) = –0.223
1n (5000) = 8.517
What is PNG’s price elasticity of demand?
–0.252
+0.322
–3.973
+3.108
Chapter 6 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Consider the cash flows in Table P6.7 for the...Ch. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - The repeating cash flows for a certain project are...
Ch. 6 - Beginning next year, a foundation will support an...Ch. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - The Geo-Star Manufacturing Company is considering...Ch. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 1STCh. 6 - Prob. 2STCh. 6 - Prob. 3STCh. 6 - Prob. 4ST
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