ENS191 QUIZ 1 Flashcards
The analysis and evaluation of the factors that will affect the economic success of engineering projects to the end that a recommendation is made which will insure the best use of capital.
Engineering Economy
The quantity of a certain commodity that is bought at a certain price at a given place and time.
Demand
The quantity of a certain commodity that is offered for sale at a certain price at a given place and time.
Supply
Market participants selling goods and services.
Producers
Market participants buying goods and services.
Consumers
The economic price for which good or service is offered in the marketplace.
Market Price
It is significantly affected by the demand, availability of substitutes and the competitive landscape.
Market Price
What are the factors that affect demand?
P -Price of other goods (substitute or complementary)
O - Outlook (consumer expectation of future income and prices)
I - Income (normal goods versus inferior goods)
N - Number of potential costumers (popularity of market)
T- Taste (fads or fashion)
What are the factors affecting supply?
P - Productivity (improvements in machines and production processes of a good or service)
I - Inputs (change in the price of inputs required to produce the good or service)
G - Government Actions (subsidies, taxes and regulations)
T - Technology (improvements in machines and production processes of a good or service)
O - Outputs (price changes in other products produced by the firm)
E - Expectations (outlook of future prices and profits)
S - Size of industry (number of firms in the industry)
When the price of a product is increased, less will be demanded.
Law of Demand
Quantity demanded and price are negatively related.
Law of Demand
Give the two reasons of law of demand.
income effect and substitution effect
More will be supplied as prices increase.
Law of Supply
Quantity supplied and price are positively related.
Law of Supply
Give the reason for the law of supply.
Profitability
The price-quantity pair where the quantity demanded is equal to quantity supplied, represented by the intersection of the demand and supply curves.
Equilibrium
The price for which the demand and supply for good or service are equal.
Equilibrium Price
The amount of output exchanged at the equilibrium price.
Equilibrium Quantity
If demand increases and supply remain unchanged, then it leads to _____ equilibrium price and _____ quantity.
higher, higher
If demand decreases and supply remain unchanged, then it leads to _____ equilibrium price and _____ quantity.
lower, lower
If supply increases and demand remain unchanged, then it leads to _____ equilibrium price and _____ quantity.
lower, higher
If supply decreases and demand remain unchanged, then it leads to _____ equilibrium price and _____ quantity.
higher, lower
When the use of one of the factors of production is limited, either in increasing cost or by absolute quantity, a point will be reach beyond which an increase in the variable factors will result in a less than proportionate increase in output.
The Law of Diminishing Returns
At the start, every unit of input leads to the productive gains.
Productive Phase
Upon hitting the point of _____, every additional input will give you a slower gain in output.
Diminishing Returns
If you reach this phase, every additional input will give you _____.
Negative Returns
Those products of services that are directly used by people to satisfy their wants.
Consumer goods and services
It is used to produce consumer goods and services or other producer goods.
Producer goods and services
Give examples for consumer goods and services
Iphone13, cars, hair color/rebonding
Give examples for producer goods and services
metals, semi-conductors, electricity
Give 4 types of market structure
- Monopolistic competition
- Oligopoly
- Monopoly
- Perfect competition
It occurs in a situation where a commodity or service is supplied by a number of vendors and there is nothing to prevent additional vendors entering the market.
Perfect competition
It is the opposite of perfect competition. It exists when a unique product or service is available from a single vendor and that vendor can prevent the entry of all others into the market.
Monopoly
It is characterized by a large number of firms, none of which can influence market price by virtue of size alone.
Monopolistic Competition
New firms can enter and established firms can exit such an industry with ease.
Monopolistic Competition
Some degree of market power is achieved by firms producing differentiated products.
Monopolistic Competition
It is a strategy that firms use to achieve market power.
Product Differentiation
It is accomplished by producing products that have distinct positive identities in consumer’s minds.
Product Differentiation
A form of industry (market) structure characterized by a few dominant firms.
Oligopoly
The behavior of any one firm in an _____ depends to a great extent on the behavior of others.
Oligopoly
It exists when there are so few suppliers of a product or service that action by one will almost inevitably result in similar action by the others.
Oligopoly
How many number of firms in perfect competition?
Many
How many number of firms in monopoly?
One
How many number of firms in monopolistic competition?
Many
How many number of firms in oligopoly?
Few
Is perfect competition product differentiated or homogeneous?
Homogeneous
Is monopoly product differentiated or homogeneous?
A single, unique product
Is monopolistic competition product differentiated or homogeneous?
differentiated
Is oligopoly product differentiated or homogeneous?
Either
In perfect competition, is price a decision variable?
No
In monopoly, is price a decision variable?
Yes
In monopolistic competition, is price a decision variable?
Yes, but limited
In oligopoly, is price a decision variable?
Yes
In perfect competition, is it easy entry?
Yes
In monopoly, is it easy entry?
No
In monopolistic competition, is it easy entry?
Yes
In oligopoly, is it easy entry?
Limited
Perfect competition is distinguished by?
No price competition
Monopoly is distinguished by?
Still constrained by market demand
Monopolistic competition is distinguished by?
Price and quality competition
Oligopoly is distinguished by?
Strategic behavior
Give examples for perfect competition.
Wheat farming and textile firm
Give examples for monopoly.
Public utility and patented drug
Give examples for monopolistic competition.
Restaurants and clothing stores
Give examples for oligopoly.
Manufacturing industries (automobiles, computers)
