ECON decision Analysis

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Solve the following problems from the back of our first chapter:

1.8

1.10

1.21

1.22

1.23

1.24

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de My Millions" me cases the authors seem millions by selling that book. De nk this is ethical? How would you lay out factors to analyze this question? by be suit- nalysis. E sed to sk by 1-6 The owner of a small machine shop has just lost of his larger customers. The solution to his pres lem, he says, is to fire three machinists to balance his workforce with his current level of business. The owner says it is a simple problem with a simple solution. (a) The three machinists disagree. Why? (b) What are the ethical factors from the perspective of the owner and the workers? 1-7 Designing a chair for use in a classroom seems like a simple task. Make an argument for how this can be considered a complex decision and include environmental and ethical factors in your orning g traf- Ency? your G n if it argument. ution 1-8 2 able Fers mot. Toward the end of the twentieth century, the U.S. government wanted to save money by closing a small portion of its domestic military installations. While many people agreed that saving money was a desir- able goal, people in areas potentially affected by a closing soon reacted negatively. Congress finally selected a panel whose task was to develop a list of installations to close, with the legislation specifying that Congress could not alter the list. Since the goal was to save money, why was this problem so hard to solve? ng веr ate Consequend Unge , Sl, or $1.25 per drink. The organi- zation recognized that the number of soft drinks sold would depend on the price charged. Even- tually the decision was made to charge $1. The criterion was (c) In many cities, grocery stores find that their sales are much greater on days when they advertise special bargains. However, the advertised special prices do not appear to increase the total physical volume of groceries sold by a store. This leads us to conclude that many shoppers' criterion is (d) A recently graduated engineer has decided to return to school in the evenings to obtain a mas- ter's degree. He feels it should be accomplished in a manner that will allow him the maximum amount of time for his regular day job plus time for recreation. In working for the degree, he will 1-24 In the fall versity dor which he the full co moved ou contract to dormitory $5000 for paid Am decided That wee to fulfill student Jay $300 of the sch in the sec Jay if he liv apartme! 1-20 Seven criteria are given in the chapter for judging which is the best alternative. After reviewing the list, devise three additional criteria that might be used. the apar month. Disrega disburse (a) Wh (b) Eva (c) Wh 1-25 '1-21 Suppose you are assigned the task of determining the route of a new highway through an older section of town. The highway will require that many older homes be either relocated or torn down. Two pos- sible criteria that might be used in deciding exactly where to locate the highway are: (a) Ensure that there are benefits to those who gain from the decision and that no one is harmed by the decision. (b) Ensure that the benefits to those who gain from the decision are greater than the losses of those who are harmed by the decision. An ele forema to be no alte the rep makin decisic Which criterion will you select to use in determining the route of the highway? Explain. 1-26 A far G water, itable 1-9 The college bookstore has put pads of engineering computation paper on sale at half price. What is the minimum and maximum number of pads you might buy during the sale? Explain. (c) 1-13 fa a 1-14 S E I 1-15 1-10/ Consider the five situations described. Which one situation seems most suitable for solution by eco- nomic analysis? (a) John has met two college students that interest him. Beth is a music major who is lots of fun to be with. Alice is a fellow engineering student, but she does not like to party. John wonders what to do. (6) You drive periodically to the post office to send or pick up packages. The parking meters cost $1 for 15 minutes—about the time required for medium length lines. If parking fines cost $20, do you put money in the meter or not? (c) The cost of car insurance varies widely from company to company. Should you check with several insurance companies when your policy comes up for renewal? (d) There is a special local sales tax ("sin tax? variety of things that the town council would like to remove from local distribution. As a result, a store has opened up just outside the town and offers an abundance of these specific items at prices about 30% less than is charged in town. Should you shop there? (e) One of your professors mentioned that you have a poor attendance record in her class. You won- der whether to drop the course now or wait to see how you do on the first midterm exam. Unfortu- nately, the course is required for graduation. A car manufacturer is considering locating an assem- bly plant in your region. 1-16 E on a 1-17 1-18 А 1-11 G (a) List two simple, two intermediate, and two com- plex problems associated with this proposal. (b) What is NIMBY? Does this come into play for this complex decision? Omic 1-22 For the project in Problem 1-21, identify the major costs and benefits. Which are market consequences, which are extra-market consequences, and which are intangible consequences? ff a hree kets, ecid- This 1-23 You must fly to another city for a Friday meet- ing. If you stay until Sunday morning your ticket will be $250, rather than $800. Hotel costs are $200 per night. Compare the economics with reason- able assumptions for meal expenses. What intangible consequences may dominate the decision? rink - to ani- nks en- The les ise cial cal ads on to as- ed um ne he 1-24In the fall, Jay Thompson decided to live in a uni- versity dormitory. He signed a dorm contract under which he was obligated to pay the room rent for the full college year. One clause stated that if he moved out during the year, he could sell his dorm contract to another student who would move into the dormitory as his replacement. The dorm cost was $5000 for the two semesters, which Jay had already paid. A month after he moved into the dorm, he decided he would prefer to live in an apartment. That week, after some searching for a replacement to fulfill his dorm contract, Jay had two offers. One student offered to move in immediately and to pa Jay $300 per month for the eight remaining mont) of the school year. A second student offered to move in the second semester and pay $2500 to Jay. Jay estimates his food cost per month is $500 if he lives in the dorm and $450 if he lives in an apartment with three other students. His share of the apartment rent and utilities will be $400 per month. Assume each semester is 41/2 months long. Disregard the small differences in the timing of the disbursements or receipts. (a) What are the three alternatives available to Jay? (b) Evaluate the cost for each of the alternatives. (c) What do you recommend that Jay do? ng пе ре g n er y 1-25 An electric motor on a conveyor burned out. The foreman told the nlant manager that the
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Surname 1
Student’s Name
Professor’s Name
Course
Date
ECON Decision Analysis
1.18
Closing of the US domestic military installations would help the country to reduce
expenses which are used on unnecessary undertakings. However, this problem was so hard to
solve due to a high rate of insecurity which was facing the country. Also, closing of one of the
US military bases would deprive people of their jobs hence causing unemployment.
1.10
The situation which is a solution for economic analysis is that of d w...


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