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ETHICS > ECONOMICS > Flashcards

ECONOMICS Flashcards

1
Q

Engineering economy is that branch of economics which involve the application of definite laws of
economics, theories of investment and business practices to engineering problems involving cost.

A

Arreola

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2
Q

It is also defined to be the study of economic theories and their application to engineering problems
with concept of obtaining the maximum benefit at the least cost as a basis for decision.

A

Arreola

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3
Q

It also involves the study of cost features and other financial data and their application in the field of
engineering as a basis for decision.

A

Arreola

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4
Q

Engineering economics is equated with practicality and economic feasibility. It is also the search for the
recognition of alternatives which are then compared and evaluated in order to come up with the most practical
design and creation.

A

Kasner

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5
Q

An important use of engineering economy is
to seek new objectives for engineering application. Engineers are constantly seeking new and wider
application of their technical knowledge for the benefit of mankind and in line with this, engineering economy
provides basic principles and laws.

A

Seeking new objectives

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6
Q

upon knowing the
objectives, next is to determine ways and means to attain such objectives. With Engineering Economy the
so-called limiting factors which may hinder the success of a project are being discovered.

A

Discovery of factors limiting

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7
Q

– The principles of engineering economy
helps to point out the analysis of choosing the best alternatives on a quantitative basis.

A

Comparison of alternatives

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8
Q

– Engineering economy enables engineers to consider
all aspects of investment from both the technical and financial viewpoints. It provides several patterns of
analysis to determine rate of return, annual costs and pay out periods, which all serves as bases for
decision.

A

Analysis of possible investment

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9
Q

– Engineers‟ main concern is on future actions, that is on
what to do and not on what has been accomplished. Decisions on future actions are more valid and accurate
if the principles of engineering economy are correctly applied.

A

Determination of bases for decision

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10
Q

later part of the
19
th
century made use of engineering economic analysis in building railroads in the U. S. In 1930,

A

Arthur Wellington

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11
Q

published his book, Principles of Engineering Economy, which emphasized on techniques that depended on
financial and actuarial mathematics.

A

Eugene Grant

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12
Q

The choice is among alternatives.

A

Develop the alternatives.

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13
Q

Only the difference in expected outcomes is considered.

A

Focus on the differences.

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14
Q

Prospective outcomes of the alternatives, economic, etc.

should be considered.

A

Use a consistent viewpoint.

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15
Q

Using a common unit of measurement of the possible

outcomes in comparing alternatives.

A

Use a common unit of measure.

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16
Q

Consider both monetary and other unit of measure in

measurement of outcomes.

A

Consider all relevant criteria.

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17
Q

Uncertainty is inherent in projecting future outcomes and

should considered in their analysis and comparison.

A

Make uncertainty explicit.

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18
Q

Projected results and decisions should be compared with actual

results to improve the decision process.

A

Revisit your decisions.

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19
Q

– those that are unaffected by changes in activity level over a feasible range of operations for the
capacity or capability available. (Insurance and taxes on facilities, general management and administrative
salaries, license fees and interest costs of borrowed capital)

A

Fixed cost

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20
Q

are those associated with an operation that vary in relation to changes in quantity of output or
other measures of activity level. For the example, the cost of materials and labor used in a product or service
are variable costs – because they vary with the number of output units even though the costs per unit stay
the same.

A

Variable cost

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21
Q

(incremental revenue) – refers to the additional cost or revenue that will result for increasing
the output of a system by one of more units. This is often quite difficult to determine in practice. Thus, if to
produce 100 units will cost P200, and the total cost for producing 110 units is P215, then the increment cost
for additional 10 units is P15 or 1.50 per unit.

A

Incremental cost

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22
Q

costs that are repetitive and occur where an organization produces similar goods or services
on a continuing basis. Variable cost are also recurring costs, because they repeat with each unit of output.
Fixed cost that is paid on a repeatable basis is a recurring cost (ex. office space rental)

A

Recurring costs

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23
Q

are those that are not repetitive even though the total expenditures maybe cumulative
over a relatively short period of time. Usually it involves the developing or establishing a capability or capacity
to operate.

A

Non-recurring costs

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24
Q

those that can be reasonably measured and allocated to a specific output or work
(Labor and materials).

A

Direct cost

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25
Q

costs that are difficult to attribute or allocate to a specific output. They are costs allocated
through a selected formula (such as proportional to direct labor hours or direct materials) to the outputs or work
activities (ex. Cost of common tools, general supplies equipment maintenance).

A

Indirect cost

26
Q

used to mean all expenditures that are not direct cost (administrative, insurance, taxes,
electricity, general repairs)

A

Overhead cost

27
Q

– representation cost per unit of output that are established in advance of actual production or
service delivery. They are developed from anticipated direct labor hours, materials and overhead categories.
Standard costs play an important role in cost control and other management functions like estimating future
manufacturing costs.

A

Standard cost

28
Q

cost that involves payment of cash.

A

Cash cost

29
Q

does not involve cash transaction; non-cash. The most common example of book cost is the
depreciation. It is included in an analysis for it affects income taxes, which are cash flows.

A

Book cost

30
Q

is one that has occurred in the past and has no relevance to estimates of future costs and revenues
related to an alternative course of action. It represents money which has been invested and which cannot be
recovered due to certain reasons. A sunk cost is common to all alternatives and is not part of the future cash
flows and can be disregarded in an engineering economic analysis.

A

Sunk cost

31
Q

– is incurred because of the use of limited resources such that the opportunity to use those
resources to monetary advantage in alternative use is foregone. It is the cost of the best rejected opportunity
and is often hidden or implied.

A

Opportunity cost

32
Q

refers to the summation of cost estimates from inception to disposal for both equipment and
projects as determined by an analytical study and estimate of total costs experienced during their life. The
objective of LCC analysis is to choose the most cost-effective approach from a series of alternatives so the least
long-term cost of ownership is achieved.

A

Life cycle cost

33
Q

– first cost or cost incurred during the acquisition phase. It is the capital required for most of
the activities in the acquisition phase.

A

Investment cost

34
Q

– series of expenditures over an extended period on a large construction project.

A

Capital investment

35
Q

– refers to the funds required for current assets (equipment, facilities) that are needed for the
start-up and support of operational activities.

A

Working capital

36
Q

– includes many of the recurring annual expense items associated with
the operation phase of the life cycle. The direct and indirect costs of operation in five primary resource areas,
1) people 2) machines 3) materials 4) energy 5) information – are major parts of the costs in this category.

A

Operation and maintenance cost

37
Q

includes those non-recurring costs of shutting down the operation and the retirement and
disposal of assets at the end of the life cycle. Ex. Costs associated with personnel, materials.

A

Disposal cost

38
Q

are those products or services that are directly used by people to satisfy
their wants. (Food, clothing, homes, cars, appliances, medical services, etc)

A

Consumer goods and services

39
Q

are used to produce consumer goods and services or other producer goods.
(Machine tools, factory buildings, buses, etc.).

A

Producer goods and services

40
Q

are those products or services that are required to support human life and activities, that will
be purchased in somewhat the same quantity even though the price varies considerably.

A

Necessities

41
Q

are those products or services that are desired by human and will be purchased if money
available after the required necessities have been obtained.

A

Luxuries

42
Q

is the quantity of a certain commodity that is bought at a certain price at a given place and time.
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded
is the amount of a certain product people are willing to buy at a certain price.

A

Demand

43
Q

The demand for a commodity varies inversely as the price of the commodity, though not
proportionately.

A

Law of Demand

44
Q

is the quantity of a certain commodity that is offered for sale at certain price at a given place and time.
It represents how much the market can offer.

A

Supply

45
Q

the supply of the commodity varies directly as the price of the commodity, though not
proportionately.

A

Law of supply

46
Q

occurs in a situation where a commodity or services is supplied by a number of
vendors and there is nothing to prevent additional vendors entering the market. There is no restriction against
other vendors from entering the market. Buyers are free to buy from any vendor, and the vendors likewise are
free to sell to anyone.

A

Perfect competition

47
Q

which exist when a unique product or service
is available from only a single vendor and that vendor can prevent the entry of all others into the market.
Examples of monopolies are the services offered by Meralco electric pants throughout the country, the telephone
companies and other public utilities, in which the sole right are being granted by the government.

A

Perfect monopoly

48
Q

exists when there are so few suppliers of a product or service that action by one will almost inevitable
result in similar action by the others. Examples of oligopoly in the Philippines are the oil companies and
manufacturers of soft drinks who hold franchises to produce drinks of foreign origin. Any change in price of
anyone of them is usually accompanied by a similar change by the other competitors.

A

Oligopoly

49
Q

The focus of economics is to understand the problem of scarcity: the problem of fulfilling the unlimited
wants of humankind with limited and/or scarce resources. Underlying the laws of demand and supply is the
concept of utility, which represents the advantage or fulfillment a person receives from consuming a good or
service. Utility, then, explains how individuals and economies aim to gain optimal satisfaction in dealing with
scarcity.

A

Utility

50
Q

Usually, the more the person consumes, the larger his or her

A

total utility

51
Q

additional satisfaction, or amount of utility, gained from each extra unit of
consumption.

A

Marginal utility

52
Q

Because there is a certain threshold of satisfaction, the consumer will no longer receive the
same pleasure from consumption once that threshold is crossed.In other words, total utility will increase at a
slower pace as an individual increases the quantity consumed.

A

the law of diminishing
marginal utility

53
Q

TR, that will result from a business venture during a given period is the product of
the selling price per unit, p, and the number of units sold, D.

A

The Total revenue,

54
Q

refers to wealth in the form of money or property that can be used to produce more wealth.

A

Capital

55
Q

“Money makes money”. This is true because if we invest money today,
by tomorrow we will have accumulated more money that what we had originally invested. And also if you borrow
money today you will have to pay in the future an amount that is larger that what you have originally owed. This
change in the amount of money over a given time period is called time value of money”.

A

The Concept of Time Value of Money

56
Q

is owned by individuals who have invested their money or property in a business project or
venture in the hope of receiving a profit and sometimes in exchange for a share of ownership in the company.
Equity financing allows a business to obtain funds without incurring debt or having to repay a specific amount
of money at a particular time.

A

Equity capital

57
Q

– also called borrowed capital, is represented by funds borrowed by a business that must be
repaid over a period of time, usually with interest. Debt financing can be either short-term, with full repayment
due in less than one year, or long-term, with repayment due over a period greater than one year.

A

Debt Capital

58
Q

measures of how effectively a company uses the money (borrowed or owned)
invested in its operations.

A

Return On Capital

59
Q

is used to indicate the rent paid for the use of money. It is also used to represent
the percentage earned by an investment in a productive operation. From the lender’s point of view, the interest
is the income produced by the money which he has lent. From the borrower’s point of view, interest is the
amount of money paid for the use of borrowed capital. The percentage of money charge as interest is called as
interest rate.

A

Interest

60
Q

if the interest to be paid is directly proportional to the length of
time the amount or principal is borrowed. The principal is the amount of money borrowed or invested.

A

Simple Interest

61
Q

the difference between total cash coming

A

Cash flow

62
Q
A

ETHICS (16 decks)

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