ENG 3000 Summer 2018

University of Manitoba

Module 1: Making Economic Decisions

Practice Problems and Solutions
Reference: Newnan, D., Jones, J., Whittaker, J., Eschenbach, T., and Lavelle, J. (2018). Engineering
Economic Analysis (4th Can. ed.). Oxford University Press.

1. If you rent a car you can (1) return it with a full gas tank, (2) return it without filling it and pay
$1.15/litre, or (3) accept a fixed price of $40 for gas. The local price is $0.97/litre for gasoline, and you
expect this car to get 8.5L/100 km. The car has a 75-litre tank. What choice should you make if you
expect to drive:
(a) 250 km?
(b) 400 km?
(c) 800 km?
(d) How do your answers change if stopping at the filling station takes 15 minutes and your time is
worth $30/hour?

40.48

2. Maria, a college student, is getting ready for three final examinations at the end of the school year.
Between now and the start of exams, she has 15 hours of study time available. She would like to get
as high an average grade as possible in her math, physics, and engineering economy exams. She

Page 1 of 2
ENG 3000 Summer 2018

feels she must study at least 2 hours for each course. If Maria estimates her grade in each subject as
follows, how much time should she devote to each course?

Mathematics Physics Engineering Economy

Study Hours Grade Study Hours Grade Study Hours Grade
2 25 2 35 2 50
3 35 3 41 3 61
4 44 4 49 4 71
5 52 5 59 5 79
6 59 6 68 6 86
7 65 7 77 7 92
8 70 8 85 8 96

3. A manufacturing firm has received a contract to assemble 1000 units of test equipment in the next
year. The firm must decide how to organize its assembly operation. One approach would involve
assigning skilled workers, at $22 per hour each, to individually assemble the test equipment. Each
worker would do all the assembly steps, and it would take 2.6 hours to complete one unit. An alternate
approach would be to set up teams of four less skilled workers, at $13 per hour each and organize the
assembly tasks so that each worker does part of the assembly. The four-man team would be able to
assemble a unit in one hour. Which approach would result in more economical assembly?

Page 2 of 2