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Engineering Economics > Terms and Concepts > Flashcards

Terms and Concepts Flashcards

1
Q

provides a systematic framework for evaluating the economic aspects of competing design solutions

A

Engineering Economy

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2
Q

are those products or
services that are directly used by people to satisfy their
wants.

A

Consumer goods and services

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3
Q

are used to produce consumer
goods and services or other producer goods

A

Producer goods and services

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4
Q

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

A

Necessities

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5
Q

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

A

Luxuries

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6
Q

is the quantity of a certain commodity that is bought at a certain price at a given place and time.

A

Demand

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7
Q

occurs when a decrease in selling price result in a greater than proportionate increase in sales.

A

Elastic demand

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8
Q

occurs when a decrease in the selling price produces a less than proportionate increase in sales.

A

Inelastic demand

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9
Q

occurs when the mathematical
product of volume and price is constant.

A

Unitary elasticity of demand

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10
Q

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.

A

Perfect Competition

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11
Q

is the opposite of perfect competition. Exists when a unique product or service is available from a single vendor and that vendor can prevent the entry of all others in to the market.

A

Monopoly

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12
Q

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

A

oligopoly

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13
Q

is the quantity of a certain commodity that is offered for sale at a certain price at a given place and time.

A

Supply

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14
Q

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

A

Fixed Cost

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15
Q

are those associated with an operation that varies in total with the quantity of output or other measures of activity level. Examples are the costs of material and labor used in product or service because they vary in total with the number of output units, even though the costs per unit stay the same.

A

Variable Cost

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16
Q

is the additional costs that results from increasing an output of a system by one (or more) units.

A

Incremental Cost

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17
Q

are costs that can be reasonably measured and allocated to a specific output or work activity. The labor and material costs directly associated with a product, service or construction activity are direct costs. For example, the materials needed to make a pair of scissors.

A

Direct Cost

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18
Q

are costs that are difficult to allocate to a specific output or work activity. Normally, they are costs allocated through a selected formula to the outputs or work activities. For example, the costs of common tools, general supplies, and equipment maintenance in a plant.

A

Indirect Cost

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19
Q

consists of plant operating costs that are not direct labor or direct material costs.

A

Overhead Cost

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20
Q

are planned costs per unit of output that are established in advanced of actual production or service delivery.

A

Standard Cost

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21
Q

involves payment of cash. Are estimated from the perspective established for the analysis and are the future expenses incurred for the alternatives being analyzed.

A

Cash Cost

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22
Q

are costs that do not involve cash payments but rather represent the recovery of past expenditures over a fixed period of time. Example: depreciation charged for the used assets

A

Book costs

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23
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.

A

Sunk costs

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24
Q

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

A

Opportunity costs

25
Q

refers to a summation of all the costs related to a product, structure, system, or service during its life span.

A

Life cycle costs

26
Q

is utilized to determine how a decision might change according to varying estimates, especially those expected to vary widely.

A

Sensitivity analysis

27
Q

The criterion used to select an alternative in engineering economy for a specific set of estimates is called

A

Measure of Worth

28
Q

explains the change in the amount of money over time for funds that are owned (invested) or owed (borrowed).

A

Time value of money

29
Q

refers to wealth in the form of money or other assets owned by a person or organization that can be used for a particular purpose such as starting a company

A

Capital

30
Q

is something a person or company owes, usually a sum of money. settled over time through the transfer of economic benefits including money, goods, or services.

A

liability

31
Q

are the things a company owns—or things owed to the company—and they include tangible items such as buildings, machinery, and equipment as well as intangible items such as accounts receivable, interest owed, patents, or intellectual property.

A

Assets

32
Q

Cash Flow

A

refers to arrows that represent inflow or outflow of cash.

33
Q

a graphical representation of cash flows drawn on a time scale.

A

Cash Flow Diagram

34
Q

Capital, Investment, Principal, Acquisition

A

First Cost

35
Q

Periodic expenses (labor, repair, utility fees, etc.)

A

O and M Cost

36
Q

the amount of the entity (asset) at the end of its life cycle.

A

Salvage Value

37
Q

is the total amount of income generated by the sale of goods and = services related to the primary operations of the business.

A

Revenue

38
Q

it is major capital expense incurred during the asset’s life cycle.

A

Overhaul

39
Q

is the amount of money earned by capital that has been invested. It is also the amount of money paid for the use of borrowed capital.

A

Interest

40
Q

In this type of interest, the interest earned is directly proportional to the amount of money invested , the number of periods of time it is invested and to the rate of interest per period.

A

Simple Interest

41
Q

is computed on the basis of 12 months of 30 days each or 360 days a year.

A

Ordinary Simple Interest

42
Q

is based on the exact number of days in a year, 365 days for an ordinary year and 366 days for a leap year.

A

Exact Simple Interest

43
Q

The accumulated amount or total amount to be paid at the end of the
period, called the ______ is the sum of the principal and the interest earned.

A

Future Sum of Money

44
Q

If the interest earned is based on the remaining principal amount and the accumulated interest charges up to the beginning of that period, the interest is said to be ___

A

Compound Interest

45
Q

it specifies the rate of interest and the
number of compounding period in one year.

A

Nominal Rate of Interest

46
Q

it is the actual or exact rate of interest on the principal during one year.

A

Effective Rate of Interest

47
Q

it is assumed that cash payments occur once a year but the compounding is continuous throughout the year.

A

Continuous Compounding Interest

48
Q

is the difference between the present worth and the worth of the paper at some time in the future.

A

Discount

49
Q

is the discount on one unit of principal for one unit of time.

A

Rate of Discount

50
Q

It is the increase in the prices of goods and services from one year to another, thus decreasing the purchasing power of money.

A

Inflation

51
Q

consist of cash flows of varying amounts and occur at varying interval of time.

A

Irregular Cash Flows

52
Q

Consist of uniform cash flows occuring at equal interval of time

A

uniform cash flow (annuity)

53
Q

payment of a debt by a series of equal payments at equal time intervals also known as

A

amortization

54
Q

a certain amount in the future by depositing equal amounts at equal intervals

A

sinking fund

55
Q

are where the payments are made at the end of each period beginning from the first period

A

ordinary annuity

56
Q

one where the first payment is made several periods after the beginning of the annuity

A

Deferred Annuity

57
Q

payment is made at the beginning of each period starting from the first period

A

Annuity Due

58
Q

Annuity where the payment periods extend forever or the periodic payments continue indefinitely

A

Perpetuity

59
Q

ratio of a constant annuity to the present value of receiving that annuity for a given length of time

A

Capital Recovery Factor

Engineering Economics (1 decks)

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