Engineering Economy Test Questions with Correct Answers Latest Update 2025 Graded A+
Engineering - Answers the profession in which a knowledge of the mathematical and natural science
gained by study, experience and practice is applied with judgement to develop ways to utilize
Engineering economy - Answers the discipline concerned with the economic aspect of engineering. It
involves the systematic evaluation with the economic merits of proposed solutions to the engineering
problems
Engineering economics - Answers the application of economic techniques to the evaluation of design
and engineering alternatives
Consumer goods and services - Answers are those products or services that are directly used by people
to satisfy their wants
Producer goods and services - Answers are used to produce consumer goods and services and other
producer goods
Price of goods and services - Answers is defined to be the present amount of money or its equivalent
which is given in exchange for it
Demand - Answers is a quantity of certain commodity that is bought at a certain price at a given place
and time
Supply - Answers is a quantity of a certain commodity that is offered for sale at a certain price at a given
place and time
Perfect competition - Answers occurs in a situation in which any given product is supplied by a large
number of vendors and there is no restriction in additional suppliers entering the market
Perfect monopoly - Answers exists when a unique product or service is available from a single supplier
and that vendor can prevent the entry of all others into the market
Oligopoly - Answers occurs when there are few suppliers and any action taken by anyone of them will
definitely after the course of action of the others
Total Revenue - Answers is the product of the selling price per unit and the number of units sold
Total Cost - Answers is the sum of the fixed costs and the variable costs
Profit/ Loss - Answers is the difference between total revenue and the total costs
Fixed costs - Answers are those unaffected by changes in activity level over a feasible range of
operations for the capacity or capability available
Variable costs - Answers are those associated with an operation that vary in total with the quantity of
output or other measures of activity level
, Incremental cost - Answers is the additional cost (or revenue) that results from increasing the output of
the system by one or more units
Recurring costs - Answers are those that are repetitive and occur when an organization produces similar
goods or services on a continuing basis
Nonrecurring Costs - Answers are those which are not repetitive even though the total expenditure may
become cumulative over a relatively short period of time
Direct costs - Answers are costs that can be reasonably measured and allocated to a specific output or
work activity.
Indirect costs - Answers are those that are difficult to attribute or allocate to a specific output or work
activity
Standard costs - Answers are representative costs per unit of output that are established in advance of
actual production or service delivery
Cash costs - Answers are that involves payment of cash
Noncash costs - Answers are costs that does not involve a cash payment, but rather represent the
recovery of past expenditures over a fixed period of time
Sunk cost - Answers 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
Opportunity cost - Answers 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
Life-cycle cost - Answers refers to a summation of all the costs, both recurring and nonrecurring, related
to product, structure system, or services during its life span
Investment cost - Answers is the capital required for most of the activities in the acquisition phase
Working capital - Answers refers to the funds required for current assets that are needed for the startup
and support of operational activities
Operational and Maintenance cost - Answers includes many of the recurring annual expense items
associated with the operation phase of the life cycle
Disposal cost - Answers includes those nonrecurring costs of shutting down the operation and the
retirement and disposal of assets at the end of the life cycle. These costs will be offset in some instances
by receipts from the sale of assets with remaining value
Economic life - Answers coincides with the period of time extending from the date of acquisition to the
date of abandonment, demotion in use, or replacement from the primary intended service
Engineering - Answers the profession in which a knowledge of the mathematical and natural science
gained by study, experience and practice is applied with judgement to develop ways to utilize
Engineering economy - Answers the discipline concerned with the economic aspect of engineering. It
involves the systematic evaluation with the economic merits of proposed solutions to the engineering
problems
Engineering economics - Answers the application of economic techniques to the evaluation of design
and engineering alternatives
Consumer goods and services - Answers are those products or services that are directly used by people
to satisfy their wants
Producer goods and services - Answers are used to produce consumer goods and services and other
producer goods
Price of goods and services - Answers is defined to be the present amount of money or its equivalent
which is given in exchange for it
Demand - Answers is a quantity of certain commodity that is bought at a certain price at a given place
and time
Supply - Answers is a quantity of a certain commodity that is offered for sale at a certain price at a given
place and time
Perfect competition - Answers occurs in a situation in which any given product is supplied by a large
number of vendors and there is no restriction in additional suppliers entering the market
Perfect monopoly - Answers exists when a unique product or service is available from a single supplier
and that vendor can prevent the entry of all others into the market
Oligopoly - Answers occurs when there are few suppliers and any action taken by anyone of them will
definitely after the course of action of the others
Total Revenue - Answers is the product of the selling price per unit and the number of units sold
Total Cost - Answers is the sum of the fixed costs and the variable costs
Profit/ Loss - Answers is the difference between total revenue and the total costs
Fixed costs - Answers are those unaffected by changes in activity level over a feasible range of
operations for the capacity or capability available
Variable costs - Answers are those associated with an operation that vary in total with the quantity of
output or other measures of activity level
, Incremental cost - Answers is the additional cost (or revenue) that results from increasing the output of
the system by one or more units
Recurring costs - Answers are those that are repetitive and occur when an organization produces similar
goods or services on a continuing basis
Nonrecurring Costs - Answers are those which are not repetitive even though the total expenditure may
become cumulative over a relatively short period of time
Direct costs - Answers are costs that can be reasonably measured and allocated to a specific output or
work activity.
Indirect costs - Answers are those that are difficult to attribute or allocate to a specific output or work
activity
Standard costs - Answers are representative costs per unit of output that are established in advance of
actual production or service delivery
Cash costs - Answers are that involves payment of cash
Noncash costs - Answers are costs that does not involve a cash payment, but rather represent the
recovery of past expenditures over a fixed period of time
Sunk cost - Answers 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
Opportunity cost - Answers 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
Life-cycle cost - Answers refers to a summation of all the costs, both recurring and nonrecurring, related
to product, structure system, or services during its life span
Investment cost - Answers is the capital required for most of the activities in the acquisition phase
Working capital - Answers refers to the funds required for current assets that are needed for the startup
and support of operational activities
Operational and Maintenance cost - Answers includes many of the recurring annual expense items
associated with the operation phase of the life cycle
Disposal cost - Answers includes those nonrecurring costs of shutting down the operation and the
retirement and disposal of assets at the end of the life cycle. These costs will be offset in some instances
by receipts from the sale of assets with remaining value
Economic life - Answers coincides with the period of time extending from the date of acquisition to the
date of abandonment, demotion in use, or replacement from the primary intended service
