APSC 221 FINAL EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2025/2026
The general Price-Demand relationship can be expressed as a linear function. (T/F) - Answers
True
When alternatives for accomplishing a specific task are being compared over one year or less
(time value of money is ignored) they can be referred to as: - Answers Present economy studies
One reason why perfect monopolies rarely occur in practice is because: - Answers Few products
are so unique that substitutes cannot be used.
A license fee is an example of an incremental cost. (T/F) - Answers False
Working capital refers to the funds required for current assets that are needed for the start-up
and support of operational activity (T/F) - Answers True
Your company must decide what to do with an old pump it purchased 12 years ago. The pump
hasn't been used for two years and is now in storage. You have collected the following data;
Purchase price 12 years ago = $7,000
Storage costs to date = $500
Current price for a new pump = $12,000
Amount offered for the pump two years ago = $1,250
Best estimate of what the pump would bring today = $1,000
What is the opportunity cost associated with this pump? - Answers $1000
________ are costs that are difficult to attribute or allocate to a specific output or work activity. -
Answers Indirect costs
Sunk costs should be included in an engineering economic analysis. (T/F) - Answers False
CERs are excellent predictors of cost if they are correctly developed from good historical data.
, (T/F) - Answers True
An index is a dimensionless number that indicates how a cost or price has changed with time
with respect to a base year. (T/F) - Answers True
______ are used in the preliminary or conceptual design stage of a project. - Answers Semi-
detailed or budget estimates
__________ is the use of historical cost data and statistical techniques to predict future costs. -
Answers Parametric cost estimating
The power-sizing technique is sometime referred to as a linear model. (T/F) - Answers False
The WBS is sometimes called a work element structure. (T/F) - Answers True
The _______ defines a maximum time period and establishes a range of cost and revenue
elements that need to be considered - Answers Life Cycle
Material costs are an example of costs that are typically included in an engineering economy
study.(T/F) - Answers True
Which technique sums the product of several quantities or components and adds these to any
components estimated directly? - Answers Factor Technique
Effective interest rate is the conventional method of stating the annual interest rate. (T/F) -
Answers False
Compound interest takes the interest accumulated in one interest period and adds it to the
principle amount used to calculate interest in the next period. (T/F) - Answers True
Market equivalence is a consequence of the ability to _________ one cash flow for another at
zero cost. - Answers Exchange
Mathematical equivalence is a consequence of the mathematical relationship between _______. -
Answers Time and Money
The conventional approach for computing interest is the compound interest approach. (T/F) -
Answers True
On a cash flow diagram, the vertical arrows pointing upwards represent a negative cash flow.
(T/F) - Answers False
Decisional equivalence is a consequence of the __________ on the part of a decision maker
among available choices. - Answers Indifference
Nominal interest rate is found by multiplying the __________ by the number of compounding
periods per year - Answers Interest rate per compounding period
The general Price-Demand relationship can be expressed as a linear function. (T/F) - Answers
True
When alternatives for accomplishing a specific task are being compared over one year or less
(time value of money is ignored) they can be referred to as: - Answers Present economy studies
One reason why perfect monopolies rarely occur in practice is because: - Answers Few products
are so unique that substitutes cannot be used.
A license fee is an example of an incremental cost. (T/F) - Answers False
Working capital refers to the funds required for current assets that are needed for the start-up
and support of operational activity (T/F) - Answers True
Your company must decide what to do with an old pump it purchased 12 years ago. The pump
hasn't been used for two years and is now in storage. You have collected the following data;
Purchase price 12 years ago = $7,000
Storage costs to date = $500
Current price for a new pump = $12,000
Amount offered for the pump two years ago = $1,250
Best estimate of what the pump would bring today = $1,000
What is the opportunity cost associated with this pump? - Answers $1000
________ are costs that are difficult to attribute or allocate to a specific output or work activity. -
Answers Indirect costs
Sunk costs should be included in an engineering economic analysis. (T/F) - Answers False
CERs are excellent predictors of cost if they are correctly developed from good historical data.
, (T/F) - Answers True
An index is a dimensionless number that indicates how a cost or price has changed with time
with respect to a base year. (T/F) - Answers True
______ are used in the preliminary or conceptual design stage of a project. - Answers Semi-
detailed or budget estimates
__________ is the use of historical cost data and statistical techniques to predict future costs. -
Answers Parametric cost estimating
The power-sizing technique is sometime referred to as a linear model. (T/F) - Answers False
The WBS is sometimes called a work element structure. (T/F) - Answers True
The _______ defines a maximum time period and establishes a range of cost and revenue
elements that need to be considered - Answers Life Cycle
Material costs are an example of costs that are typically included in an engineering economy
study.(T/F) - Answers True
Which technique sums the product of several quantities or components and adds these to any
components estimated directly? - Answers Factor Technique
Effective interest rate is the conventional method of stating the annual interest rate. (T/F) -
Answers False
Compound interest takes the interest accumulated in one interest period and adds it to the
principle amount used to calculate interest in the next period. (T/F) - Answers True
Market equivalence is a consequence of the ability to _________ one cash flow for another at
zero cost. - Answers Exchange
Mathematical equivalence is a consequence of the mathematical relationship between _______. -
Answers Time and Money
The conventional approach for computing interest is the compound interest approach. (T/F) -
Answers True
On a cash flow diagram, the vertical arrows pointing upwards represent a negative cash flow.
(T/F) - Answers False
Decisional equivalence is a consequence of the __________ on the part of a decision maker
among available choices. - Answers Indifference
Nominal interest rate is found by multiplying the __________ by the number of compounding
periods per year - Answers Interest rate per compounding period
