20 MAKING ECONOMIC DECISIONS
(b) Should an automatic machine be purchased to
replace three workers now doing a task by hand?
(c) Would it be wise to enroll for an early morn-
ing class so you could avoid traveling during the
morningtrafficrushhours?. ....
(d)Would you be better off if you changed your
major?
(e)One of the people you might marry has a job that
pays very little money, while another one has a
professional job with an excellent salary.Which
one should you marry?1-3 Which one of the followingproblems ismostsuitable
for analysis by engineering economic analysis?
(a) Some45jtcandy bars are on sale for 12 bars for
$3. Sandy, who eats a couple of candy bars a
week, must decide whether to buy a dozen at the
lower price.
(b) A woman has $150,000 in a bank checking
account that pays no interest. She can either invest
it immediately at a desirable interest rate or wait
a week and know that she will be able to obtain
an interest rate that is 0.15% higher.
(c)Joebacked his car into a tree, damaging the
fender. He has automobile insurance that will pay
for the fender repair. But if he files a claim for
payment, they may change his "good driver"
rating downward and charge him more for car
insurance in the future.
1-4 If you have $300 and could make the right decisions,
how long would it take you to become a millionaire?
Explain briefly what you would do.
1-5 Many people write books explaining how to make
money in the stock market. Apparently the authors
plan to maketheirmoney selling books telling other
people how to profit from the stock market. Why don't
these authors forget about the books and make their
money in the stock market?
1-6 The owner of a small machine shop has just lost one of
his larger customers. The solution to his problem, he
says, is to fire three machinists to balance his work-
force with his current level of business. The owner
says it is a simple problem with a simple solution.
The three machinists disagree. Why?
1-7 Every college student had the problem of selecting
the college or university to attend. Was this a simple,
intermediate, or complex problem for you? Explain.
1-8 Toward the end of the twentieth century, the U.S.
government wanted to save money by closing a small
portion of all its military installations throughout the
United States. While many people agreed that sav-
ing money was a desirable goal, areas potentially af-
fected by selection to close soon reacted negatively.
Congress finally selected a panel of people 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?
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.
1-10 Consider the seven situations described. Which one
situation seems most suitable for solution by engi-
neering economic analysis?
(a) Jane has met two college students that interest
her. Bill is a music major who is lots of fun to
be with. Alex, on the other hand, is a fellow en-
gineering student, but he does not like to dance.
Jane wonders what to do.
(b)You drive periodically to the post office to pick
up your mail. The parking meters require 10jt for
6 minutes-about twice the time required to get
from your car to the post office and back. If park-
ing fines cost $8, do you put money in the meter
or not?
(c) At the local market, candy bars are 45 jt each or
three for $1. Should you buy them three at a time?
(d)The cost of automobile insurance varies widely
from insurance company to insurance company.
Should you check with several companies when
your insurance comes up for renewal?
(e) There is a special local sales tax ("sin tax") on a
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 of-
fers an abundance of these specific items at prices
about 30% less than is charged in town. Should
you shop there?
(f) Your mother reminds you that she wants you to at-
tend the annual family picnic. That same Saturday
you already have a date with a person you have.
been trying to date for months.
(g) One of your professors mentioned that you have
a poor attendance record in her class. You wonder
whether to drop the course now or wait to see how
you do on the first midterm exam. Unfortunately,
the course is required for graduation.