Introduction to Engineering Economics

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Questions and Answers

What is the primary focus of economics?

Maintenance of organizations

Construction of structures and machines

Innovation and design

Distribution of goods and services (correct)

What is the primary concern of engineering economics?

Analysis of choices made by businesses

Allocation of resources for engineering projects (correct)

Construction and maintenance of devices

Innovation and design of structures

What is the purpose of studying engineering economy?

To focus on the distribution of goods and services

To analyze the choices made by governments and nations

To develop creative applications of science and mathematics

To expose students to widely used project evaluation methods (correct)

Who can use the tools and methods of engineering economy?

Individuals, businesses, and non-profit organizations Signup and view all the answers

What is the role of engineering economy in decision making?

To make decisions about resource allocation and project selection Signup and view all the answers

What does engineering focus on?

Application of science and mathematical methods Signup and view all the answers

In the context of a small office needing to buy a printer/copy machine, which factor is likely to be the basis for the decision?

Minimization of cost Signup and view all the answers

When considering the project of widening a two-lane highway to four lanes, what must the county board weigh?

Relative benefit of lower accident rates vs. possible loss in value of homes Signup and view all the answers

In engineering economics, which of the following is a major point to consider when making economic decisions?

Initial Cost Signup and view all the answers

For a new graduate engineer allocated to a new city for a 5+ year project, should he rent or buy an apartment?

Consider the duration and financial aspects Signup and view all the answers

Which type of engineering economic decision involves justifying the cost of a new robotic tailoring machine based on sales increase?

Service improvement Signup and view all the answers

When deciding on building material for a small house, which type of engineering economic decision is being made?

Equipment and process selection Signup and view all the answers

When is the right time to replace old equipment in engineering economics?

When it becomes economically justified Signup and view all the answers

What should a company consider before deciding to buy equipment to perform an operation now done manually?

The long-term cost savings Signup and view all the answers

In the context of high demand for a certain product, what decision should be made regarding building or acquiring a new facility?

Determine if it's worth investing in a new facility to meet demand Signup and view all the answers

What type of investment involves spending 30 million LE on product promotion through advertising?

New product and product expansion investment Signup and view all the answers

Study Notes

Focus of Economics

Economics primarily examines the allocation of scarce resources to meet society's unlimited wants and needs.

Engineering Economics Concerns

Engineering economics focuses on the evaluation of economic performance of engineering projects, analyzing cost-effectiveness, and maximizing outputs based on financial resources.

Purpose of Studying Engineering Economy

Studying engineering economy equips individuals to make informed financial decisions in engineering projects, emphasizing cost analysis, investment evaluation, and financial forecasting.

Users of Engineering Economy Tools

Engineers, project managers, financial analysts, and decision-makers in various industries utilize engineering economy tools and methods for effective financial analysis.

Role in Decision Making

Engineering economy plays a critical role in decision-making by providing frameworks for evaluating project feasibility and profitability through cost-benefit analysis.

Engineering Focus

Engineering predominantly focuses on the application of scientific and mathematical principles to design, analyze, and improve systems and processes.

Printer/Copy Machine Decision Factor

In a small office scenario, the decision to purchase a printer or copy machine will likely be based predominantly on cost-effectiveness and overall operational efficiency.

Highway Widening Project Considerations

The county board must weigh costs, potential traffic increases, environmental impacts, and community benefits when considering the expansion of a two-lane highway to four lanes.

Major Considerations in Economic Decisions

Key points in engineering economics include time value of money, project life cycle costs, and risk assessment when making economic decisions.

New Graduate Apartment Decision

A new graduate engineer should assess rental versus purchasing options based on project duration, housing market trends, and personal financial stability.

Justifying Investment in Technology

Decisions involving justifying the cost of new equipment, such as a robotic tailoring machine, are categorized as investment analysis, focusing on anticipated sales increases.

Building Material Decision Type

Selecting building materials for a small house involves a design decision in engineering economics, affected by cost, durability, and sustainability.

Timing Equipment Replacement

The right time to replace old equipment hinges on maintenance costs, efficiency improvements, and advancement in technology from an economic perspective.

Considerations for Buying New Equipment

Before purchasing equipment to replace manual operations, companies should evaluate cost-benefit analyses, ROI, labor savings, and operational efficiency.

Facility Investment Decision

In response to high product demand, the decision to build or acquire a new facility should factor in scalability, cost implications, and market demand projections.

Promotion Investment Type

An investment involving 30 million LE on product promotion through advertising is classified as a marketing expenditure aimed at enhancing market visibility and sales revenue.

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Description

Explore the fundamental concepts of engineering economics, including the production, distribution, and allocation of resources, and the application of scientific and mathematical methods in engineering. Learn about the choices made by individuals, businesses, governments, and nations in resource allocation.