59 Questions
In engineering economics, what is defined as the analysis and evaluation of the monetary consequences by using the theories and principles of economics to engineering applications, designs, and projects?
Economic Analysis
What is considered as the standard unit which forms the basis of a country’s domestic money supply?
Currency
In economic terms, what is defined as any tangible economic product that contributes directly or indirectly to the satisfaction of human wants?
Goods or commodities
What is the term for the cost of an alternative that must be forgone in order to pursue a certain action?
Opportunity cost
What is the measure of responsiveness of the quantity demanded of a good to a change in its price?
Price elasticity of demand
What term refers to the difference between total revenue and total cost?
Profit
What term describes the process of determining the present value of a payment or a stream of payments that is to be received in the future?
Discounting
What is the term for the rate at which the general level of prices for goods and services is rising?
Inflation rate
What is the term for a market structure in which a small number of firms have the large majority of market share?
Oligopoly
In economic analysis, what term describes a situation in which resources are allocated inefficiently and products are not being produced in the least costly way?
Market failure
What is the characteristic of perfect competition?
Homogeneous products
What is the market situation with one buyer and no substitute?
Monopsony
When does a natural monopoly occur?
When economies of scale are significant
What does the law of diminishing returns state?
Increasing factors of production result in a less than proportionate increase in output
What is the role of buyers in markets?
Basic consuming units of commodities
What is the definition of demand in economics?
The need, want, or desire for a product backed by the money to purchase it
What is the market situation with few sellers and few buyers?
Duopoly
What is the characteristic of monopoly?
One seller and many buyers
What is the market situation with many sellers and many buyers?
Perfect competition
What is the role of sellers in markets?
Entities that make goods or services available
Which type of annuity requires payments at the beginning of each period?
Annuity due
What is the primary characteristic of a perpetuity?
Infinite series of payments
Which financial instrument is typically issued at a discount and redeemed at face value upon maturity?
T-bill
In the context of time value of money, what does the term 'discounting' refer to?
Determining the present value of future cash flows
What is the distinguishing feature of a bond with a 'call provision'?
Can be redeemed by the issuer before maturity
Which type of interest does not earn interest on previously earned interest?
Simple interest
What type of annuity has payments that fluctuate over time?
Growing annuity
Which of the following is a characteristic of a commodity?
Non-standardized
When comparing two bonds, all else being equal, which bond would have a higher present value?
Lower market interest rate
What is the term used for the process of converting future cash flows into their equivalent present value?
Discounting
What is the term used to describe the process of converting future cash flows into their equivalent present value?
Discounting
In engineering economics, what is the term for the cost of an alternative that must be forgone in order to pursue a certain action?
Opportunity cost
What is the market situation with one buyer and no substitute?
Monopsony
Which type of interest does not earn interest on previously earned interest?
Simple interest
What is the term for the rate at which the general level of prices for goods and services is rising?
Inflation rate
What term refers to the difference between total revenue and total cost?
Profit
What is the measure of responsiveness of the quantity demanded of a good to a change in its price?
Price elasticity of demand
Which financial instrument is typically issued at a discount and redeemed at face value upon maturity?
Treasury bill
What is considered as the distinguishing feature of a bond with a 'call provision'?
Issuer's option to repay the bond before maturity
What is the distinguishing characteristic of an ordinary annuity?
Payments are made at the end of each period
Which type of annuity requires equal periodic payments for a specified number of periods?
Ordinary annuity
What financial instrument is typically issued at a discount and redeemed at face value upon maturity?
Treasury bills (T-bills)
In the context of time value of money, what does the term 'compounding' refer to?
Earning interest on previously earned interest
What is the market situation with one seller and many buyers?
Monopoly
What is the term for the process of converting future cash flows into their equivalent present value?
Discounting
Which of the following is a characteristic of a bond with a 'call provision'?
Issuer's right to redeem the bond before maturity
In perfect competition, what characterizes the products being exchanged?
Homogeneous products
In a market situation of monopsony, what is the defining characteristic?
One buyer and no substitute
What is defined as the analysis and evaluation of the monetary consequences using economic principles in engineering applications?
Engineering economics
What is the characteristic of a natural monopoly?
Significant economies of scale and minimized costs under a single producer
What is the market situation with many sellers offering similar but not identical products?
Monopolistic competition
What does the law of diminishing returns state?
Increasing factors of production result in a less than proportionate increase in output
What is the primary characteristic of a perpetuity?
Fixed periodic payments for a specified number of periods
What is the distinguishing feature of a bond with a 'call provision'?
It can be redeemed by the issuer before maturity
What is the definition of demand in economics?
The need, want, or desire for a product backed by the money to purchase it
What is the market situation with few sellers and few buyers?
Duopoly
What is the measure of responsiveness of the quantity demanded of a good to a change in its price?
Price elasticity of demand
In economic terms, what is defined as any tangible economic product that contributes directly or indirectly to the satisfaction of human wants?
Goods and services
What is the role of buyers in markets?
Basic consuming units of commodities
Study Notes
Engineering Economics MCQ Summary
- The text is a series of multiple-choice questions about engineering economics.
- The questions cover topics such as interest, annuities, bonds, and financial securities.
- It includes questions about the definitions and concepts related to economics and finance.
- The questions also cover topics like simple interest, compound interest, and time value of money.
- It addresses different types of annuities, including ordinary annuity, annuity due, and perpetuity.
- The text explains the characteristics and elements of ordinary annuities.
- It includes questions about financial instruments such as T-bills, securities, and bonds.
- The questions cover the present worth and value of bonds, as well as their features.
- The text also addresses topics like utility, necessity, and commodities.
- It provides multiple-choice questions about the definitions and concepts related to borrowing and lending.
- The questions aim to test the understanding of engineering economics principles and financial calculations.
- The text is part of a comprehensive series of MCQs in general engineering and applied sciences.
Market and Competition Overview
- Goods and services are defined as tangible economic activities that contribute to human satisfaction.
- Goods and services are classified into consumer and producer products, with consumer products being necessary for human life and activities.
- Markets are the exchange mechanisms bringing together buyers and sellers of products, factors of production, or financial securities.
- Buyers or consumers are the basic consuming units of commodities, and sellers are entities that make goods or services available in exchange for monetary consideration.
- Market situations include monopsony (one buyer, no substitute), oligopoly (few sellers and few buyers), and perfect competition (many buyers and sellers).
- Other market situations include monopoly (one seller, many buyers), duopsony (many sellers, few buyers), and duopoly (few sellers, few buyers).
- Perfect competition is characterized by many sellers and buyers, homogeneous products, free market entry and exit, and perfect information.
- Monopoly exists when a single vendor can prevent the entry of all other vendors in the market.
- Natural monopoly occurs when economies of scale are significant, and costs are minimized under a single producer.
- The law of diminishing returns states that increasing factors of production results in a less than proportionate increase in output.
- Demand refers to the need, want, or desire for a product backed by the money to purchase it, while supply refers to the amount of a product available for sale.
- In perfect competition, the price at which a product will be supplied and purchased is the price that equates supply and demand.
Test your knowledge of engineering economics with this comprehensive set of multiple-choice questions. Covering topics such as interest, annuities, bonds, and financial instruments, these questions will challenge your understanding of economic principles and financial calculations in an engineering context. Ideal for students and professionals in engineering and applied sciences.
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