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Homework Solutions for Engineering Economic Analysis, 10th Edition Newnan, Lavelle, Eschenbach : Making Economic Decisions

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A survey of students answering this question indicated that they thought that about 40% of their decisions were conscious decisions. 1-2 (a) Yes. The choice of an engine has important money consequences, so it would be suitable for engineering economic analysis. (b) Yes. Important economic and social consequences. Some might argue that the social consequences are more important than the economics. (c) ? Probably there are a variety of considerations much more important than the economics. (d) No. Picking a career on an economic basis sounds terrible. (e) No. Picking a wife on an economic basis sounds even worse. 1-3 Of the three alternatives, the $150,000 investment problem is most suitable for economic analysis. There is not enough data to figure out how to proceed, but if the “desirable interest rate” were 9%, then foregoing it for one week would mean an immediate loss of: 1/52 (0.09) = 0.0017= 0.17% It would take over a year at 0.15% more to equal the 0.17% foregone now. The candy bar problem is suitable for economic analysis. Compared to the investment problem it is, of course, trivial. Joe’s problem is a real problem with serious economic consequences. The difficulty may be in figuring out what one gains if he pays for the fender damage, instead of having the insurance company pay for it. 1 Homework Solutions for Engineering Economic Analysis, 10th Edition Newnan, Lavelle, Eschenbach 1-4 Gambling, the stock market, drilling for oil, hunting for buried treasure—there are sure to be a lot of interesting answers. Note that if you could double your money every day, then: 2x ($300) = $1,000,000 and x is less than 12 days. 1-5 Maybe their stock market “systems” don’t work! 1-6 It may look simple to the owner because he is not the one losing a job. For the three machinists it represents a major event with major consequences. 1-7 For most high school seniors there probably are only a limited number of colleges and universities that are feasible alternatives. Nevertheless, it is still a complex problem. 1-8 It really is not an economic problem solely — it is a complex problem. 1-9 Since it takes time and effort to go to the bookstore, the minimum number of pads might be related to the smallest saving worth bothering about. The maximum number of pads might be the quantity needed over a reasonable period of time, like the rest of the academic year.

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