ProblemSet1ESP168a.F10

ProblemSet1ESP168a.F10 - October 11, 2010 (due October 25,...

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October 11, 2010 (due October 25, 2010) Problem Set 1 ESP 168a: Choice Models, Difference Equations, Equilibrium 1a. You are manager of a large apartment complex with 100 units. You need to replace heaters in the apartments. Your budget is $150,000. You have a choice between buying gas heaters costing $1000 each or solar heaters that cost $3,000 each. Sketch the possibility frontier showing how many of each kind of heater you can afford to buy. 1b. All 100 apartments must have new heaters. Does this change the possibility frontier? 1c. Your building has to satisfy clean air regulations. To stay below your emissions quota, the total nitrogen oxide (NOx) output from all the heaters in your complex cannot exceed 160 kg/year. In average usage, a gas heater emits 2 kg NOx per year, while a solar heater emits none. What is the maximum number of gas or solar heaters that would be allowed and still meet emissions restrictions? Do emissions regulations change the possibility frontier? 2. You are mayor of a town and are considering several options for improving the water quality. You have 5 bids for water treatment plants, and are evaluating these in
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ProblemSet1ESP168a.F10 - October 11, 2010 (due October 25,...

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