This post covers the unit wise question bank with answer for the subject engineering economics.
MG6863 Engineering
Economics
Unit 1 Introduction to Economics
Part-A
1. Define Engineering economics.
Engineering
economics may be defined as a set of principles, concepts, techniques and
methods by which alternatives within a project can be compared and evaluated
for the best monetary return.
2. What is meant by the law of supply and law of demand?
Law of supply states that the
quantities that will be sold at a certain price. This is also states that the
higher the price, the higher the quantity supplied.
Law
of demand states that if all other factors remain equal, the higher the price
of goo, the less people will demand the good. This means the higher the price
the lower the quantity demanded.
3.What are the procedures used for engineering economics?
(i) Problem recognition, formulation and evaluation
(ii) Development of the feasible alternatives
(iii) Development of the cash flows for each alternative
(iv) Selection of a criteria
(v) Analysis and comparison of the alternatives
(vi) Selection of the preferred alternative
(vii) Performance monitoring and post evaluation results
4. Write short notes on scope of engineering economics.
(i) It provide basis for resource allocation problem.
(ii) It helps to understand the market conditions, general
economic environment in which the firm is working.
(iii) It provides a number of tools and techniques to solve
engineering problems related to product mix, output level, pricing the product,
investment, quantum of advertisement etc.
(iv) To improve the productivity, reducing human efforts,
controlling and reducing cost.
5.Differentiate engineering efficiency and economic efficiency.
Engineering
efficiency is measured by the relationship between the physical quantities of
input. It occurs when all inputs are deployed in a way that generates the most
output for the least overall cost in resources.
Engineering efficiency = output/Cost
of all inputs
Economic
efficiency is measured by the relationship between the values of the output and
the values of the input. It helps to examine profitability for an investment
better then engineering economics.
Economic efficiency = Values of
output/ Cost of all inputs
6.What are the principles or concepts of engineering economics?
(i) Develop the alternatives
(ii) Focus on the differences
(iii) Use a consistent view point
(iv) Use a common unit of measure
(v) Consider all relevant criteria
(vi) Make uncertainty explicit
(vii) Revisit your decisions
7. What are the elements of cost?
(i) Materials
(a) Direct materials cost (b) Indirect materials cost
(ii) Labour cost
(b) Direct labour cost (b) Indirect labour cost
(iii) Expenses
(a) Direct expenses (b) Indirect expenses
8. What is marginal cost and marginal revenue?
The
amount at any given volume of output by which aggregate costs are changed, if
the volume of output is increased or decreased by one unit. The revenue that can be obtained from
selling one more unit of product is called marginal revenue.
9. What is meant by sunk cost and opportunity cost?
A
cost which has incurred or sunk in the past and is not relevant to the
particular decision making is sunk cost or sunk loss. It may be variable or
fixed or both.
Opportunity
cost is defined as the potential benefit that is given up as you seek alternative
course of action.
10. Define break even analysis.
It
is concerned with finding the point at which revenues and
costs agree exactly.
It can be carried out algebraically or graphically.
It
implies that the total revenue equals the total cost at some
point in the
operations.
11.Define P/V ratio.
It
gives the relationship of contribution to sales.
It is also called contribution
sales ratio.
P/V
ratio = Contribution/Sales
P/V
ratio= (Fixed cost + profit)/Sales
P/V
ratio = (Sales-Variable cost)/Sales
12. What are the procedures used for the selection of materials?
(i) Translation
(ii) Screening
(iii) Ranking
(iv) Selection
