ECON 389 Lecture 8: Lecture 8 Qualitative Analysis of Two Differential Equations
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- Suppose a particular consumer has 8 birrs to be spent on two goods, A and B. The unit price of good A is 2 birr and the unit price of B is 1 birr. The marginal utility (MU) she gets from the consumption of the goods is given below.
Quantity |
TUA |
TUB |
1 |
36 |
30 |
2 |
24 |
22 |
3 |
20 |
16 |
4 |
18 |
12 |
5 |
16 |
10 |
6 |
10 |
4 |
- Based on the cardinal analysis, what is the combination of the two goods that gives maximum utility to the consumer?
- What is the total utility at the utility maximization level?
Engineering Economy class. Please, when answering this problem, it will be more than appreciated if you can present the whole process (equations) before solving it. Just to understand better everything. Example: Present Value = 20,000(P/F, i, n)+45,000(A/F, i, n)(P/F, i, n)... Thanks in advance!
There are two manufacturing processes that can be used by a company to reduce energy losses in the equipment. The following cost information for these two processes is known:
Process A | Process B | |
Initial Cost | $170,000 | $220,000 |
Operation and Maintenance Cost | $7,000 quarterly | $5,000 quarterly |
Useful Life (Life Cycle) | 2 years | 4 years |
Residual Value | $30,000 | $42,000 |
By doing the following analysis, select which manufacturing process must be selected (A or B):
a) Find the Present Value with an interest rate of 12% annually computed quarterly.
b) Quarterly equivalent uniform value with an interest rate of 8% annually computed quarterly
c) Capitalized Cost with an interest rate of 14% annually computed quarterly
d) Which manufacturing process must be selected