Lecture 1 Flashcards
What are the basic economic problems?
The three basic economic problems are:
What to produce?
How to produce?
For whom to produce?
What is Engineering Economics?
Engineering Economics deals with making decisions based on need/want recognition, evaluating alternatives, and executing decisions for efficient resource allocation.
What is the difference between Microeconomics and Macroeconomics?
Microeconomics focuses on individual economic units such as consumers, firms, and markets.
Macroeconomics deals with aggregate economic variables such as national output, interest rates, and inflation.
What is a Capitalist Economy?
A Capitalist Economy is characterized by free markets, where the forces of demand and supply determine production and allocation without government intervention.
What is NPV (Net Present Value)?
NPV is the difference between the present value of cash inflows and outflows over a period of time, used to assess the profitability of a project.
What is IRR (Internal Rate of Return)?
IRR is the discount rate that makes the net present value (NPV) of a project zero, indicating the project’s expected rate of return.
What is Break-Even Analysis?
Break-Even Analysis calculates the point at which total revenue equals total costs, meaning there is no profit or loss.
What is Depreciation in Engineering Economics?
Depreciation is the reduction in the value of an asset over time, often due to wear and tear, and is accounted for in financial calculations.
What is Economic Order Quantity (EOQ)?
EOQ is the optimal quantity of inventory to order that minimizes total inventory costs, including holding and ordering costs.
What are the main goals of economic systems?
The main goals include:
High employment
Price stability
Equitable income distribution
Economic growth
What are the merits of a Socialist Economy?
Merits include:
Distributive justice
Social security
Elimination of economic fluctuations
What is the Life Cycle Cost Method?
This method calculates the total cost of ownership of a product or system over its entire life cycle, including acquisition, operation, and disposal.
What is Sensitivity Analysis?
Sensitivity Analysis looks at how changes in the inputs of a model affect its output. It helps identify which inputs cause the most uncertainty in the results.
