APSC 221 MC EXAM questions with
solutions
The general price-demand relationship can be expressed as a linear function. (T/F) -
ANSWER>>True
A license fee is an example of an incremental cost. (T/F) - ANSWER>>False
One reason why perfect monopolies rarely occur in practice is because:
a) few products are so unique that substitutes cannot be used.
b) a large number of vendors can supply the same product.
c) additional suppliers can enter the marker freely.
d) people usually stop buying the product before this occurs - ANSWER>>a)
The power-sizing technique is sometimes referred to as a linear model. (T/F) - ANSWER>>False
CERs are excellent predictors of cost if they are correctly developed from good historical data.
(T/F) - ANSWER>>True
Which technique sums the product of several quantities or components and adds these to any
components estimated directly? a) unit technique.
b) power-sizing techniques.
c) factor techniques.
d) adding techniques - ANSWER>>c)
___ is the use of historical cost data and statistical techniques to predict future costs.
a) power-sizing.
b) parametric cost estimating.
c) selected estimating.
d) historical estimating - ANSWER>>b)
The WBS is sometimes called a work element structure. (T/F) - ANSWER>>True
What does Cn stand for in the above equation?
a) reference year for which cost is known.
b) cost of price of the item in reference year.
c) year for which the cost is to be estimated.
,d) estimated cost of price of the item in year being analyzed. - ANSWER>>d)
Material costs are an example of costs that are typically included in an engineering economy
study. (T/F) - ANSWER>>True
___ are used in the preliminary or conceptual design stage of a project.
a) cost and revenue estimates
b) definitive estimates
c) semi-detailed or budget estimates
d) order of magnitude estimates - ANSWER>>c)
The ___ defines a maximum time period and establishes a range of cost and revenue elements
that need to be considered in developing cash flows.
a) life cycle
b) work breakdown structure
c) estimating techniques
d) cost model - ANSWER>>a)
The conventional approach for computing interest is the compound interest approach. (T/F) -
ANSWER>>True
Compound interest takes the interest accumulated in one interest period and adds it to the
principle amount used to calculated interest in the next period. (T/F) - ANSWER>>True
Mathematical equivalence is a consequence of the mathematical relationship between___.
a) first cost and salvage value
b) sunk cost and opportunity cost
c) depreciation and market value
d) time and money - ANSWER>>d)
The base unit of time over which an interest is calculated is called the___.
a) interest duration
b) time period
c) interest cycle
d) interest period - ANSWER>>d)
On a cash flow diagram, the vertical arrows pointing upwards represent a negative cash flow.
(T/F) - ANSWER>>False
, Market equivalence is a consequence of the ability to ____ one cash flow for another at zero
cost.
a) understand
b) predict impact of
c) exchange
d) analyze - ANSWER>>c)
Nominal interest rate is found by multiplying the ___ by the number of compounding periods
per year.
a) principle sum
b) interest rate per compounding period
c) effective interest rate
d) none of the above - ANSWER>>b)
A cash flow diagram summarizes the timing and magnitude of cash flows as they occur over
time. (T/F) - ANSWER>>True
Decisional equivalence is a consequence of the ___ on the part of a decision marker among
available choices.
a) indifference
b) market analysis
c) study of general economic activity levels within an industry
d) understanding - ANSWER>>a)
The timing of cash flows is always simple and regular. (T/F) - ANSWER>>False
An assumption required by the principle of discrete compounding is that the compounding
periods are of equal length. (T/F) - ANSWER>>True
To find the annuity value, A, equivalent to a present amount, P, with a given interest rate, i, and
the number of periods over which this annuity will be paid, N, one would use the ___ factor.
a) Capital recovery
b) Uniform series compound amount
c) Series present worth
d) None of the above - ANSWER>>a)
A set of equal disbursements or receipts over a sequence of periods, is referred to as a(n)
solutions
The general price-demand relationship can be expressed as a linear function. (T/F) -
ANSWER>>True
A license fee is an example of an incremental cost. (T/F) - ANSWER>>False
One reason why perfect monopolies rarely occur in practice is because:
a) few products are so unique that substitutes cannot be used.
b) a large number of vendors can supply the same product.
c) additional suppliers can enter the marker freely.
d) people usually stop buying the product before this occurs - ANSWER>>a)
The power-sizing technique is sometimes referred to as a linear model. (T/F) - ANSWER>>False
CERs are excellent predictors of cost if they are correctly developed from good historical data.
(T/F) - ANSWER>>True
Which technique sums the product of several quantities or components and adds these to any
components estimated directly? a) unit technique.
b) power-sizing techniques.
c) factor techniques.
d) adding techniques - ANSWER>>c)
___ is the use of historical cost data and statistical techniques to predict future costs.
a) power-sizing.
b) parametric cost estimating.
c) selected estimating.
d) historical estimating - ANSWER>>b)
The WBS is sometimes called a work element structure. (T/F) - ANSWER>>True
What does Cn stand for in the above equation?
a) reference year for which cost is known.
b) cost of price of the item in reference year.
c) year for which the cost is to be estimated.
,d) estimated cost of price of the item in year being analyzed. - ANSWER>>d)
Material costs are an example of costs that are typically included in an engineering economy
study. (T/F) - ANSWER>>True
___ are used in the preliminary or conceptual design stage of a project.
a) cost and revenue estimates
b) definitive estimates
c) semi-detailed or budget estimates
d) order of magnitude estimates - ANSWER>>c)
The ___ defines a maximum time period and establishes a range of cost and revenue elements
that need to be considered in developing cash flows.
a) life cycle
b) work breakdown structure
c) estimating techniques
d) cost model - ANSWER>>a)
The conventional approach for computing interest is the compound interest approach. (T/F) -
ANSWER>>True
Compound interest takes the interest accumulated in one interest period and adds it to the
principle amount used to calculated interest in the next period. (T/F) - ANSWER>>True
Mathematical equivalence is a consequence of the mathematical relationship between___.
a) first cost and salvage value
b) sunk cost and opportunity cost
c) depreciation and market value
d) time and money - ANSWER>>d)
The base unit of time over which an interest is calculated is called the___.
a) interest duration
b) time period
c) interest cycle
d) interest period - ANSWER>>d)
On a cash flow diagram, the vertical arrows pointing upwards represent a negative cash flow.
(T/F) - ANSWER>>False
, Market equivalence is a consequence of the ability to ____ one cash flow for another at zero
cost.
a) understand
b) predict impact of
c) exchange
d) analyze - ANSWER>>c)
Nominal interest rate is found by multiplying the ___ by the number of compounding periods
per year.
a) principle sum
b) interest rate per compounding period
c) effective interest rate
d) none of the above - ANSWER>>b)
A cash flow diagram summarizes the timing and magnitude of cash flows as they occur over
time. (T/F) - ANSWER>>True
Decisional equivalence is a consequence of the ___ on the part of a decision marker among
available choices.
a) indifference
b) market analysis
c) study of general economic activity levels within an industry
d) understanding - ANSWER>>a)
The timing of cash flows is always simple and regular. (T/F) - ANSWER>>False
An assumption required by the principle of discrete compounding is that the compounding
periods are of equal length. (T/F) - ANSWER>>True
To find the annuity value, A, equivalent to a present amount, P, with a given interest rate, i, and
the number of periods over which this annuity will be paid, N, one would use the ___ factor.
a) Capital recovery
b) Uniform series compound amount
c) Series present worth
d) None of the above - ANSWER>>a)
A set of equal disbursements or receipts over a sequence of periods, is referred to as a(n)
