Question

A car company uses an average of 200 MWh of electricity per car when it produces 1000 cars. It will use 300 MWhs to produce the 1001st car. Electricity sells for $100/MWh and cars sell for $25,000. What is energy efficiency equal to when the company produces 1000 cars? Assuming it has no other costs, do you recommend the car company produce the 1001st car?

Answer 1

Given data:-

• For the 1st 1000 cars, the electricity consumed per =200MWh
• For the 1001st car electricity consumed=300 MWh

Energy Efficiency(EE) for 1000 cars

=OUTPUT/INPUT =1 CAR /200MWh=0.005 cars/MWh

It will also be same for 1000 cars.

Energy Efficiency (EE) for 1001st car

EE=OUTPUT /INPUT =1car/300mWh=0.0033 MWh

MRP for 1001st car

0.0033×$25000=$82.5

Since,

$82.5<$100, therefore the car company should not produce the 1001st car.