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EEA109-4 > Engineering Economy > Flashcards

Engineering Economy Flashcards

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1
Q

is the analysis and evaluation of the monetary consequences by using the theories and principles of economics to engineering applications, designs and project.

A

Engineering Economy

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2
Q

It may also be defined as the study of problems involving economic solutions with the concept of obtaining the maximum productivity or reward at least cost or risk.

A

Engineering Economy

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3
Q

It is the study of the desirability of making an investment

A

Engineering Economy

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4
Q

It is defined as any tangible economic product (soap, car, shirts, tools, machines, etc.) that contributes directly or indirectly to the satisfaction of human wants.

A

Good or commodity

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5
Q

Is defined as any tangible economic activity (hair dressing, insurance, banking, catering, etc.) that contribute directly or indirectly to the satisfaction of human wants

A

Service

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6
Q

Economists classify goods and services as either ____________ or _________

A

“consumer goods and
services” or “producer goods and services.”

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7
Q

Are those products or services that are directly used by people to satisfy their wants. Examples are houses, cars, clothes, appliances, food, books, movies, medical and dental services etc.

A

Consumer goods and services

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8
Q

also satisfy human wants but indirectly in as much as they are used to produce the consumer goods and services. Examples are services are factory buildings, machine tools, airplanes, ships, buses, etc.

A

Producer goods and services

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9
Q

Goods and services are divided into two types:

A

necessities and
luxuries

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10
Q

refer to the goods and services that are required to support human life, needs and activities

A

Necessities

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11
Q

is defined as any product that has an income-elasticity of demand less than one. This means that as an income rises, proportionately less income is spent on such products. Examples of necessity products include basic foodstuffs like bread and rice, clothing, etc

A

Necessities product or staple product

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12
Q

Are those goods and services that are desired by human
and will be acquired only after all the necessities have been
satisfied

A

Luxuries

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13
Q

is defined as any product that has an incomeelasticity of demand greater than one. This means that as income
rises, proportionately more income is spent on such products

A

Luxury product

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14
Q

refers to the exchange mechanism that brings together the sellers and the buyers of product, factor of production or financial security. It may also refer to the place or area in which buyers and sellers exchange a well-defined
commodity.

A

market

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15
Q

is defined as the basic consuming or demanding unit of a commodity. It may be an individual purchaser of a good or service, a household (a group of individuals who make joint purchasing decisions), or a government.

A

Buyer or consumer

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16
Q

Is defined as an entity which makes product, good or service available to buyer or consumer in exchange of monetary consideration.

A

Seller

17
Q

(also known as atomistic competition) refers to the market situation in which any given product is supplied by a very large number of vendors and there is no restriction against additional vendors from entering the market.

A

Perfect competition

18
Q

Perfect competition is a type of market situation characterized by the
following

A
  • Many sellers and many buyers
  • Homogenous products
  • Free market-entry and exit
  • Perfect information
    *Absence of all economic friction
19
Q

Since there is a large number of sellers and a large number of buyers, each seller and buyer will become sufficiently small to be unable to influence the price of the product transacted

A

Many sellers and many buyers

20
Q

The products offered by the competing sellers are identical not only in physical attributes but are also regarded as identical by the buyers who have no preference between the products of various producers.

A

Homogeneous products

21
Q

There are no barriers to entry or impediments to the exit of the existing sellers.

A

Free market-entry and exit:

22
Q

All buyers and all sellers have complete information on the prices being asked and offered in all other parts of the market

A

Perfect information

23
Q

There is a total absence of economic friction including transport cost from one part of the market to another

A

Absence of all economic friction

24
Q

Perfect Competition Example

A
  • Farmer’s Market
  • Online Shopping
25
Q

is the opposite of perfect competition.

A

Monopoly

26
Q

Monopoly is characterized by the ff:

A
  • One seller and many byers - A market comprised of a single supplier selling to a multitude or small, independently-acting buyers.
  • Lack of substitute products - There are no close substitutes for the monopolist’s product.
  • Blockaded entry - Barriers to entry are so severe that it is impossible for other sellers to enter the market.
27
Q

Monopoly examples

A
  • Luxottica
  • Meta (Facebook)
  • Google
28
Q

if the single vendor can prevent the entry of all vendors into the market

A

perfect monopoly

29
Q

is a market situation where economies of scale are so significant that costs are only minimized when the entire output of an industry is supplied by a single producer so that supply costs are lower under monopoly than under perfect competition and oligopoly.

A

natural monopoly

30
Q

exists when there are so few suppliers of a product or service that the action of one will inevitably result in a similar action by the other suppliers.

A

Oligopoly

31
Q

Oligopoly is characterized by the ff:

A
  • Few seller and many buyers - The bulk of the market supply is in the hands of a relatively few sellers who sell to many small buyers.
  • Homogeneous or differentiated products - The products offered by the suppliers may be identical or more commonly, differentiated from each other in one or more respects. These differences may be of a physical nature, involving functional
    features, or may be purely “imaginary” in the sense that artificial differences are created through advertising and sales promotion.
  • Difficult market entry - High barriers of entry which make it difficult for new sellers to enter the market.
32
Q

Oligopoly Examples

A
  • Cellular Networks & Internet Providers (ISP - Globe, Smart, PLDT, Converge
  • Operating Systems of Device - Microsoft Windows, Apple iOS, Google Android, Linux
33
Q

is the need, want or desire for a product backed by the money by the money to purchased it. In economic analysis, demand is always based on “willingness and ability to pay” for a product, not merely want or need for the product.

A

Demand

34
Q

Factors that affect Demand:

A
  • Product price
  • Buyer Income
  • Buyer preference
  • Buyer expectation
  • Available substitutes
  • Complementary products
  • Market size
35
Q

is the amount of a product made available for sale

A

Supply

36
Q

Factors that affect Supply:

A
  • Production capacity
  • Production costs
  • Competitors
  • Availability of materials
  • Supply chains
37
Q

The law of supply and demand may be stated as follows:

A

“Under conditions of perfect competition, the price at which any given product will be supplied and purchased is the price that will result in the supply and the demand being equal.”

38
Q

is the point in which supply and demand curves
meet on a graph.

A

Equilibrium price

39
Q

The four stages in the product life cycle are:

A
  1. Introduction - requires significant marketing efforts
  2. Growth - sales revenue usually grows exponentially from the takeoff point
  3. Maturity - price undercutting and increased promotional efforts are common as companies try to capture customers from competitors
  4. Decline - sales of the product start to fall and profitability decreases

EEA109-4 (3 decks)

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