Engineering Economics Principles

False (B)

To evaluate and compare the economic merits of different engineering solutions to identify the most cost-effective option.

define

<p>Number of employees involved (D)</p> Signup and view all the answers

<p>Finance (D)</p> Signup and view all the answers

<p>Costs of material and labor used in a product or service (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Develop the Alternatives = Clearly defining the problem and identifying potential solutions. Focus on the Differences = Comparing only the relevant variations between alternatives. Use a Consistent Viewpoint = Analyzing outcomes from a consistent perspective. Use a Common Unit of Measure = Expressing outcomes in a standardized unit for easier comparison. Consider All Relevant Criteria = Incorporating both monetary and non-monetary factors in decision making. Make Risk and Uncertainty Explicit = Recognizing and addressing the inherent uncertainties in future estimations. Revisit your Decisions = Continuously evaluating the performance of the chosen solution against initial projections.</p> Signup and view all the answers

<p>Consumer goods are used directly by individuals to satisfy their needs and wants, while producer goods are used to produce other goods or services.</p> Signup and view all the answers

<p>It demonstrates a favorable balance of long-term benefits over costs. (D)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>perfectly competitive</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Time Value of Money</p> Signup and view all the answers

<p>direct</p> Signup and view all the answers

<p>Perfect Competition = A market with a single supplier dominating the market. Monopoly = A market with many suppliers and free entry and exit. Rule No. 1 of Present Economy Studies = Select the alternative that minimizes total cost per defect-free unit. Rule No. 2 of Present Economy Studies = Select the alternative that maximizes overall profitability based on defect-free units.</p> Signup and view all the answers

<p>Principle No. 7 emphasizes the importance of ongoing monitoring and evaluation to ensure that the chosen solution continues to be the most effective option over time. It encourages a proactive approach to decision making based on actual performance.</p> Signup and view all the answers

<p>Fixed Costs = Salaries of general management Variable Costs = General maintenance costs for a factory Direct Costs = Materials used in building a bridge Indirect Costs = Utilities costs for a manufacturing plant</p> Signup and view all the answers

<p>Goodwill, Convenience, Friendship, Morale</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>General management and Administrative Salaries (D)</p> Signup and view all the answers

<p>Production or construction (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>A cash cost involves an actual payment of money, while a book cost is a non-cash expense that represents the recovery of past expenditures.</p> Signup and view all the answers

<p>life-cycle</p> Signup and view all the answers

<p>Incremental cost = The additional cost incurred by producing one more unit Standard cost = A planned cost per unit established before production Sunk cost = Unrecoverable expenses from past decisions Opportunity cost = The potential benefit lost by choosing one alternative over another</p> Signup and view all the answers

<p>The cost of developing a new product that was ultimately unsuccessful (D)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Recurring annual expenses associated with the operation phase, such as utilities, repairs, and labor.</p> Signup and view all the answers

The evaluation of economic merits for engineering solutions.

Stand-alone solutions for engineering problems.

The initial cost to acquire an asset.

The anticipated resale value of an asset at the end of its life.

Maintaining a defined perspective when analyzing alternatives.

A standardized measurement for comparing alternatives.

Factors that affect future outcomes in decision-making.

The process of comparing projected vs. actual outcomes.

Five main categories of resources in the operation phase: people, machines, materials, energy, and information.

Nonrecurring costs related to shutting down operations and disposing of assets at the end of their life cycle.

Products or services directly used by people to satisfy their wants, such as food and clothing.

Market condition where many suppliers exist, and new entrants can easily join without restrictions.

Choose the alternative that maximizes profitability when revenues vary among options based on defect-free units produced.

The estimated inflows and outflows of money.

The alternative of inaction, or status quo.

Basis for decision-making using financial units like dollars.

Noneconomic factors influencing decision-making that are hard to quantify.

Change in money's value over time, crucial in economic analysis.

Costs unchanged by activity level, within a certain range.

Costs that change with the level of output or activity.

Costs directly tied to a specific output or task.

The additional cost or revenue from increasing output by one or more units.

Planned costs per unit of output established before production.

Costs that involve actual cash payments.

Irretrievable costs from past decisions irrelevant for future analysis.

The cost of forgoing the next best alternative when making a decision.

Total costs related to a product or service over its life span.

Capital required for activities during the acquisition phase.

Recurring expenses related to the operation phase of a product or service.