You run a small classroom market experiment with only three buyers and three sellers. The willingness to pay (reservation value
) for buyer A is $7 for each unit; for buyer B, it is $5 for each unit; and for buyer C, it is $3 for each unit. The willingness to accept (reservation value) for seller X is $2 for each unit; for seller Y, it is $4 for each unit; and for seller Z, it is $6 for each unit. 1.) Using the multipoint curve drawing tool, draw the demand curve for this market. Label the curve appropriately. 2.) Using the multipoint curve drawing tool, draw the supply curve for this market. Label the curve appropriately. (Hit the "Esc" key after you have plotted your last point to exit the drawing tool) Carefully follow the instructions above, and only draw the required objects.
1 answer:
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Answer:
The incremental benefit cost ratio is less than 1 therefore we must select site 1.
Explanation:
The incremental BCR can be determined using the following formula
8% , 10)
⇒
⇒ 8%, 20)
⇒
⇒ = $203,704.42
Incremental initial investment = 203,704.42 - 149,029.49
= $ 54,674.93
Incremental benefits = 580,000 - 520,000 = 60,000
Incremental O&M = 75,000 - 80,000 = - $ 5000
Incremental Disbenefits = 140,000 - 90,000 =$ 50,000
All solving using the present worth method also incremental benefit cost ratio comes out to be 0.2743.
The incremental benefit cost ratio is less than 1 therefore we must select site 1.