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Questions and Answers
What is the primary difference between individual and collective consumption?
What is the primary difference between individual and collective consumption?
Which sector of the economy is responsible for producing goods and services?
Which sector of the economy is responsible for producing goods and services?
What does the real flow of income represent in an economy?
What does the real flow of income represent in an economy?
What does investment refer to in an economic context?
What does investment refer to in an economic context?
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In the circular flow of income model, what does the monetary flow of income indicate?
In the circular flow of income model, what does the monetary flow of income indicate?
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What is a primary focus of economics?
What is a primary focus of economics?
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Which criterion is NOT part of economically acceptable engineering solutions?
Which criterion is NOT part of economically acceptable engineering solutions?
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Which of the following best describes the 'circular flow of economic activities'?
Which of the following best describes the 'circular flow of economic activities'?
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What role does engineering economics play in decision making?
What role does engineering economics play in decision making?
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What is considered an economic activity?
What is considered an economic activity?
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Which factor is NOT typically considered in production?
Which factor is NOT typically considered in production?
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What is the primary mission of engineering economics?
What is the primary mission of engineering economics?
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Which statement about the study of economics is false?
Which statement about the study of economics is false?
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Study Notes
Introduction
- Economics is the study of production, distribution, and consumption of goods and services.
- Engineering is the profession where mathematical and natural sciences are used to develop ways to utilize materials and forces of nature economically for the benefit of mankind.
Engineering Economics
- Engineering economics involves systematic evaluation of proposed solutions to engineering problems.
- It's about balancing trade-offs in the most economical manner.
- Engineering economy involves technical analysis focused on economic aspects.
- It assists in decision making.
Criteria for Economically Acceptable Solutions
- Positive balance of long-term benefits over long-term costs.
- Promotion of well-being and survival of an organization.
- Embodiment of creative and innovative technology and ideas.
- Identification and scrutiny of estimated outcomes.
- Translation of profitability to the bottom line through a valid and acceptable measure of merit.
Economics Fundamentals
- Economics studies economic activities.
- It's the study of wants, efforts, wealth, and satisfaction.
- Economics is the study of human behavior related to ends and scarce means.
- Economics studies the problem of choice.
Circular Flow of Economic Activities
- This flow has no defined beginning or end.
- An economic activity is a systematic endeavor to satisfy a material need.
- Vital economic activities include production, distribution, consumption, and investment.
Vital Economic Activities
- These activities are essential for the functioning and survival of an economy.
- Production: Creation of utility or value in goods or services.
- Distribution: Allocation of total output, income, or wealth among individuals or factors of production.
- Consumption: Use of goods and services for individual and collective wants.
- Investment: Excess of production over consumption in an accounting year.
Types of Consumption
- Individual Consumption: Use of goods and services for personal needs.
- Collective Consumption: Use of goods and services for the benefit of the community.
Sectors of the Economy
- Household Sector: Includes households consuming goods/services and providing factor services.
- Business Sector: Produces goods/services using factor services.
- Government Sector: Engages in both consumption and production.
Flow of Income
- Real Flow of Income: Flow of factor services from households to producers and the corresponding flow of goods/services from producers to households.
- Monetary Flow of Income: Flow of factor income (rent, interest, profit, wages) from producers to households as rewards for their services.
Circular Flow of Income in Different Sectors
- Two Sector Model: Simplest model with only households and businesses.
- Three Sector Model: Includes households, businesses, and government.
- Four Sector Model: Includes households, businesses, government, and foreign sector (international trade).
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Description
This quiz covers the fundamentals of engineering economics, focusing on the systematic evaluation of engineering solutions and the criteria for economically acceptable solutions. Understand how economics integrates with engineering to promote innovation and profitability in organizations.