Pearson eText for Engineering Economy -- Instant Access (Pearson+)
17th Edition
ISBN: 9780137533138
Author: William Sullivan, Elin Wicks
Publisher: PEARSON+
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Chapter 6, Problem 64P
To determine
Calculate the annual worth.
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not use ai please
1. Lisa has $48 per week set aside for coffees (x) and lunches (z). The price of coffee is $4 and
lunches are $6. What is Lisa's budget line equation (with z on the left-hand side)? Graph the
budget line, and show how it changes when the price of lunches rise to $8 (including intercepts).
What is the new budget line equation?
2. Suppose utility for a consumer of movies (x) and golf (z) is U = 20x0.420.5. The consumer has set
aside $1000 to consumer movies and golf for a year.
a. If the price of movies is $20 and the price of golf is $40, what is the utility-maximizing
consumption of movies and golf?
b. Show the optimal consumption bundle on a graph, showing a budget line (with
intercepts), a tangent indifference curve, and the optimal choice.
3. Sam has set aside $480 for entertainment this month, which is golf (x) and/or bowling (z). A
round of golf is $40 and a night of bowling is $30. His utility function is U = 3x + 2z.
a. What is his MRS?
b. Solve for the optimal choice of golf…
Question Seven
There are specific applications of the hidden-action or moral hazard model. Consider employment
contracts signed between a firm's owners and a manager who runs the firm on behalf of the
owners. The manager is offered an employment contract which they can accept and decide how
much effort, e ≥ 0, to exert. Suppose that an increase in effort, e, increases the firm's gross profit,
not including payments to the manager, but is personally costly to the manager and the firm's gross
profit, Пg, takes the following form: Пg = e +ε, ε~N(0,2). Let s denote the salary, which may
depend on effort and/or gross profit, depending on what the owner can observe, offered as part of
the contract between the owner and manager. Suppose that the manager is risk averse and has a
utility function with respect to salary of the form:
Aσ²
U(W)=μ- 2
a) Derive the optimal result of the owner's expected net profit where there is full information and
state what it implies.
b) Suppose now that the…
Chapter 6 Solutions
Pearson eText for Engineering Economy -- Instant Access (Pearson+)
Ch. 6 - An oil refinery finds that it is necessary to...Ch. 6 - The Consolidated Oil Company must install...Ch. 6 - One of the mutually exclusive alternatives below...Ch. 6 - Three mutually exclusive design alternatives are...Ch. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Fiesta Foundry is considering a new furnace that...Ch. 6 - Prob. 8PCh. 6 - DuPont claims that its synthetic composites will...Ch. 6 - Prob. 10P
Ch. 6 - Which alternative in the table below should be...Ch. 6 - Prob. 12PCh. 6 - The alternatives for an engineering project to...Ch. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Refer to the situation in Problem 6-16. Most...Ch. 6 - An old, heavily used warehouse currently has an...Ch. 6 - Prob. 19PCh. 6 - Two electric motors (A and B) are being considered...Ch. 6 - Two mutually exclusive design alternatives are...Ch. 6 - Pamela recently moved to Celebration, Florida, an...Ch. 6 - Environmentally conscious companies are looking...Ch. 6 - Prob. 24PCh. 6 - Two 100 horsepower motors are being considered for...Ch. 6 - In the Rawhide Company (a leather products...Ch. 6 - Refer to Problem 6-2. Solve this problem using the...Ch. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Two electric motors are being considered to drive...Ch. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Potable water is in short supply in many...Ch. 6 - Three mutually exclusive investment alternatives...Ch. 6 - Prob. 36PCh. 6 - A companys MARR is 10% per year. Two mutually...Ch. 6 - Prob. 38PCh. 6 - a. Compare the probable part cost from Machine A...Ch. 6 - A one-mile section of a roadway in Florida has...Ch. 6 - Two mutually exclusive alternatives are being...Ch. 6 - Prob. 42PCh. 6 - IBM is considering an environmentally conscious...Ch. 6 - Three mutually exclusive earth-moving pieces of...Ch. 6 - A piece of production equipment is to be replaced...Ch. 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 - Use the imputed market value technique to...Ch. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57PCh. 6 - Prob. 58PCh. 6 - Prob. 59PCh. 6 - Prob. 60PCh. 6 - Prob. 61PCh. 6 - Prob. 62PCh. 6 - Prob. 63PCh. 6 - Prob. 64PCh. 6 - Prob. 65PCh. 6 - Prob. 66PCh. 6 - Three models of baseball bats will be manufactured...Ch. 6 - Refer to Example 6-3. Re-evaluate the recommended...Ch. 6 - Prob. 69SECh. 6 - Prob. 70SECh. 6 - Prob. 71SECh. 6 - Prob. 72CSCh. 6 - Prob. 73CSCh. 6 - Prob. 74CSCh. 6 - Prob. 75FECh. 6 - Prob. 76FECh. 6 - Prob. 77FECh. 6 - Complete the following analysis of cost...Ch. 6 - Prob. 79FECh. 6 - For the following table, assume a MARR of 10% per...Ch. 6 - Prob. 81FECh. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Prob. 83FECh. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Consider the mutually exclusive alternatives given...Ch. 6 - Prob. 87FE
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- 1. The IS/MP model assumes that the Fed sets the real interest rate at a given level Rt. Suppose the Fed adopts a monetary policy rule that instructs it how to change the real interest rate in response to short-run output. Let's call this a monetary policy rule (MPR): The parameter x is positive. Rt=+xY a) Redraw the IS/MP diagram replacing the MP curve with the MPR curve. Show how an aggregate demand shock affects output and interest rates in the short run. Use the IS and MPR equations to solve for the changes in output and the real interest rate. b) How does the change in a affect investment in the IS/MPR model? Explain how a tax cut affects short-run output and investment in this version of the short-run model. The effect on investment is called crowding out. c) Add the Phillips curve to complete the short-run model. Illustrate how the Fed's choice of large it makes reveals its trade off between inflation and output in the short run.arrow_forwardnot use ai pleasearrow_forwardFems A and B are duopolist producers of widgets. The cost function for producing widgets C(Q)-Q² The market demand function for widgets i Q-192P Qmeasures thousands of widgets per year, Competition in the widget market is described by the Coumot model Instructions: Round your answers to 2 decimal places a What are the firms' Nanh equbrium output? b. What is the resulting price? c. What do they each emp How does the price compare to marginal cost? Price is ck to marginal cost How do the price and the two fems' joint profit compare to the monopoly price and prof Compared to the monopoly price, the Cournot price is to sed. Compared to the monopoly profit, the joint profit of the two fems to selectarrow_forward
- Suppose the marginal social cost of television sets is $100. This is constant and equal to the average cost of television sets. The annual demand for television sets is given by the following equation: Q = 200,000-500P, where Qis the quantity sold per year and P is the price of television sets. a) If television sets are sold in a perfectly competitive market, calculate the annual number sold. Under what circumstances will the market equilibrium be efficient? b) Show the losses in well-being each year that would result from a law limiting sales of television sets to 100,000 per year. Show the effect on the price, marginal social benefit, and marginal social cost of television sets. Show the net loss in well-being that will result from a complete ban on the sales of television sets. (show with graphs.)arrow_forwardrefer to exhibit 8.12 and identify each curve in the grapharrow_forwardQ1. (Chap 1: Game Theory.) In the simultaneous games below player 1 is choosing between Top and Bottom, while player 2 is choosing between Left and Right. In each cell the first number is the payoff to player 1 and the second is the payoff to player 2. Part A: Player 1 Top Bottom Player 2 Left 25, 22 Right 27,23 26,21 28, 22 (A1) Does player 1 have a dominant strategy? (Yes/No) If your answer is yes, which one is it? (Top/Bottom) (A2) Does player 2 have a dominant strategy? (Yes/No.) If your answer is yes, which one is it? (Left/Right.) (A3) Can you solve this game by using the dominant strategy method? (Yes/No) If your answer is yes, what is the solution?arrow_forward
- not use ai pleasearrow_forwardsubject to X1 X2 Maximize dollars of interest earned = 0.07X1+0.11X2+0.19X3+0.15X4 ≤ 1,000,000 <2,500,000 X3 ≤ 1,500,000 X4 ≤ 1,800,000 X3 + XA ≥ 0.55 (X1+X2+X3+X4) X1 ≥ 0.15 (X1+X2+X3+X4) X1 + X2 X3 + XA < 5,000,000 X1, X2, X3, X4 ≥ 0arrow_forwardnot use aiarrow_forward
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