Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

California is designing its statewide high-speed rail system. The system runs a number of high speed trains N to accommodate a number of travelers,

 

California is designing its statewide high-speed rail system. The system runs a number of high speed trains N to accommodate a number of travelers, P. The value of the system is a function of N and P: F(N,P). On the other hand, operating the system incurs a cost, taken to be the number of trains N times the average cost per train c. 1.1. What is the sign of the first-order derivative of F(N,P) with respect to N and P? (5 points) 1.2. If the objective is to maximize the net value of the system, express the objective function. In addition, each train in the system has a seat capacity of K seats. Write out the seat capacity constraint. (8 points) 1.3. Write Kuhn-Tucker conditions of the above constrained maximization problem. You may use fy and fp to denote the first-order partial derivatives of F with respect to N and P. (7 points) 1.4. Do you think the Lagrange multiplier involved in the Kuhn-Tucker conditions will be zero? If not, express fp as a function of f. (5 points) 1.5. Economic theory indicates that the optimal train fare, t*, should be set equal to the marginal value to train travelers, t* = fp. In order for the system to operate break-even, would the state subsidy be needed? If yes, what would be the amount? (5 points)

Step by Step Solution

3.54 Rating (151 Votes )

There are 3 Steps involved in it

Step: 1

11 What is the sign of the firstorder derivative of F N P with respect to N and P 5 points The sign of the firstorder derivative of F N P with respect to N and P will depend on the specific function o... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Engineering Economy

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

15th edition

132554909, 978-0132554909

More Books

Students also viewed these Accounting questions

Question

Describe the components of identity.

Answered: 1 week ago

Question

71/2 % of what amount is $1.46?

Answered: 1 week ago

Question

12 3/4 % of what amount is $27.50?

Answered: 1 week ago

Question

$1.34 is what percent of $655?

Answered: 1 week ago