Summer SampFinalQuest

Summer SampFinalQuest - MIME 310 ENGINEERING ECONOMY SAMPLE...

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M I M E 3 1 0 E N G I N E E R I N G E C O N O M Y SAMPLE FINAL EXAM QUESTIONS Department of Mining and Materials Engineering McGill University
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ii F O R E W O R D The following are selected questions from Engineering Economy final examinations, arranged by chapters of the Engineering Economy Notes. Their purpose is to give you examples of typical problems that you should be able to solve in the course of an exam. These are supplied without solutions (answers are given for numerical problems), to maximize the benefits that you will de- rive from solving them on your own. If you have questions concerning any particular problem, please consult the TAs or course instructor(s) during the appropriate hours. Prof. Bilodeau
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1 CHAPTER 1. INTRODUCTION 1.1 The supply and demand curves for a particular product are shown in the figure below. i) Determine the arc elasticity of supply between prices of $24 and $26 per unit. [2.2] ii) Determine the total consumer expenditure under equilibrium conditions. [$3 483 000] iii) Given that the introduction of new technology causes the supply curve to shift to higher levels by an amount of 20 000 units (at all prices), determine graphically the new equilibrium price and quantity . [$25.90, 142 000 units/yr] 1.2 The demand schedule for a commodity traded in the Canadian market place is as follows: Price ($/kg) 6 8 10 12 14 16 18 20 Quantity (10 6 kg/yr) 2.60 2.15 1.80 1.50 1.25 1.05 0.90 0.76 i) The market equilibrium is currently at $12/kg. What change in total consumer expenditure would oc- cur if the commodity's price rose from $12/kg to $14/kg? [ $500 000 less] ii) Is the demand for this commodity elastic or inelastic in the $12-14/kg price range? Support your an- swer with an explanation. [Elastic, because the total consumer expenditure decreases as the price increases] iii) Is the elasticity of demand unitary at a price somewhat above, or below, the current equilibrium price of $12/kg? Support your answer with an explanation. [Below; as the total consumer expenditure de- creases as the price increases, it should be maximized at a price below the current equilibrium price] 1.3 Last month, twenty-eight million litres of gasoline were sold per week in the Montreal area at a price of $0.60 per unit. A recent increase in price of $0.04 per litre has caused weekly sales to decline by one million litres. i) For the price range of concern above, determine the arc elasticity of demand for gasoline. [0.56] ii) Determine the total consumer expenditure at the current market equilibrium point. [$17.28 mil.] 18 20 22 24 26 28 30 32 34 36 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 QUANTITY ('000 units/yr) PRICE ($/unit)
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2 iii) Given the elasticity measure derived in part i above, what effect (qualitative) , if any, did the price in- crease have on total consumer expenditures? [The total consumer expenditure increased because elasticity is less than 1] 1.4 Based on the production function illustrated below, determine graphically the input levels for: i) Maximum output; [65 000 units] ii) Maximum productivity; [52 500 units] iii) Maximum marginal product; [40 000 units] iv) Maximum average product; [52 500 units] v) Equal marginal product and average product;
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Summer SampFinalQuest - MIME 310 ENGINEERING ECONOMY SAMPLE...

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