Engineering Economics Flashcards
it is the analysis and evaluation of the factors that will
affect the success of engineering projects to the end that
a recommendation be made which will ensure the best
use of capital.
Engineering Economy
it is an economic or a market situation in which only a
single seller or producer supplies a commodity or a
service.
Monopoly
-poly = number of selllers
keyphrase: single seller or producer
it is a market situation in which there are so few
suppliers of a particular product that one supplier’s
actions significantly impact prices and supply.
Oligopoly
-poly = number of selllers
keyphrase: few suppliers
it is a market condition in which a product is traded
freely by buyers and sellers in large numbers without
any individual transaction affecting the price.
Perfect Competition
it is an economic or market situation in which a single
consumer or buyer buys a commodity or a service from
suppliers.
Monopsony
-psony = number of buyers
keyphrase: single consumer or buyer
It is an economic or market situation in which there are
many sellers or producers that supplies a commodity or
a service to very few consumers.
Oligopsony
-psony = number of buyers
keyphrase: very few consumers
it is an economic system based on the private
ownership of the means of production and distribution of
goods, characterized by a free competitive market and
motivation by profit.
Capitalism
keyphrase: private ownership, motivation by profit
these are tangible things – things that you can touch –
that satisfy human wants.
Goods
these are activities that people do for themselves or for
other people to satisfy their wants.
Services
products or services that are required to support
human life and activities, which will be purchased in
somewhat the same quantity even though the price
varies considerably.
Necessities / Needs
products or services that are desired by humans and
will be purchased if money is available after the required
necessities have been obtained.
Luxuries
the quantity of a certain commodity that is bought at a
certain price at a given place and time.
Demand
keyphrase: commodity that is bought
the quantity of a certain commodity that is offered for
sale at a certain price at a given place and time.
Supply
keyphrase: commodity that is offered for sale
under conditions of perfect competition the price at
which a given product will be supplied and purchased is
the price that will result in the supply and the demand
being equal.
Law of Supply and Demand
when the use of one of the factors of production is
limited, either in increasing cost or by absolute quantity,
a point will be reached beyond which an increase in the
variable factors will result in a less that proportionate
increase in output
Law of Diminishing Returns
interest on an investment that is calculated once per
period, usually annually, on the amount of the capital
alone and not on any interest already earned.
Simple Interest
a type of simple interest in which interest is calculated
as through each month had 30 days.
Ordinary Simple Interest
keyphrase: each month had 30 days.
it is a type of simple interest in which interest is
calculated on the basis of a year with 365 days rather
than the conventional 360 days.
Exact Simple Interest
keyphrase: basis of a year with 365 days
is the discount of one unit of principal per unit time
Rate of Discount
is defined as the basic annual rate of interest.
Nominal Rate of Interest
is defined as the actual or exact rate of interest earned
on the principal during one-year period
Effective Interest Rate
is defined as a series of equal payments occurring at
equal interval of time.
Annuity
is a type of annuity where the payments are made at
the end of each period beginning from the 1st period.
Ordinary Annuity
keyphrase: end of each period
is a type of annuity where the payments are made at
the beginning of each period starting from the 1st period.
Annuity Due
keyphrase: beginning of each period
is the type of annuity where the first payment is made
later than the first or is made several periods after the
beginning of the annuity
Deferred Annuity
keyphrase: first payment is made
later than the first
is a series of disbursements or receipts that increases
or decreases in each succeeding period by constant
amount.
Uniform Arithmetic Gradient
keyphrase: increases or decreases, constant amount
is a series consisting of end-of-period payments, where
each payment increases or decreases by a fixed
percentage
Uniform Geometric Gradient
keyphrase: increases or decreases, fixed percentage
refers to the present worth of a property that is assumed to last forever. It is the sum of the first cost and the present costs of perpetual replacement, operation and maintenance.
Capitalized Cost
is the decrease in the value of physical property due to
passage of time.
Depreciation
is a certificate of indebtedness of a corporation usually
for a period not less than ten years and guaranteed by a
mortgage on certain assets of the corporation or its
subsidiaries
Bonds
coporation indebtness BONDS
written records that convey the business activities and the financial performance of a business, person, or entity
Financial Statements
the activity of setting up a business, taking on financial risks in the hope of profit
Entrepreneuship
the manifestation of the time value of money, and it primarily represents “rent” paid for the use of money
Interest
the number of days in a year for an Ordinary Interest
360 days
the number of days in a year for Exact Interest in a normal year
365 days
the number of days in a year for Exact Interest in a leap year
366 days
How do you identify a leap year?
a year is a leap year if it is divisible by 4 except for century marks not divisible by 400 (1900, 2100, etc.)
Which of the following is not an ordinary year?
2006
2014
2024
2200
2024
investment securities where an investor lends money to a person a company or a government for a set of period of time, in exchange for regular interest payments
Bonds
investment securities invester lends BONDS
record all of the money flowing into an account, while credits record all of the money flowing of an account
Debits and Credits
refers to a financial statement that reports a company’s assets, liabilities, and shareholder equity at a specific point of time
Balance Sheet
refers to a general increase in the prices of goods and services in an economy over a period of time
inflation
Inflation is measured by
CPI / Consumer Price Index
a type of business that is established by just one person
Sole Proprietorship
a special corporation with a single stockholder
One-Person Corporation / OPC
OPC single stockholder
a type of business that requires two or more people who agree to contribute assets, with the intent of dividing profits among all parties involved
Partnership
a type of business comprised of many invididuals (maximum of 15) who act as single entity to advance the interest of the corporation as a whole
Corporation
an association of persons with a common bond of interest
Cooperative
a financial ratio used to calculate the benefit an investor will receive in relation to their investment cost
Return on Investment / ROI
the relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy
Supply and Demand
Law of Supply states that
As price increases, quantity supplied increases. As price decreases, quantity supplied decreases.
Law of Demand states that
As price increases, quantity demanded decreases. As price decreases, quantity demanded increases.
A series of payments paid at regular intervals, where payments are uniform, i.e., equal or constant amount
Annuity
The fundamental equation used in Break-Even Analysis
Total Income = Total expenses
an indicator showing the relationship between the relative costs and benefits of a proposed prohect, expressed in monetary or qualitative terms
Benefit-to-Cost Ratio / BCR