CE40/A1

SEAT NUMBER: C3 JANUARY 19, 2018

GO, JAMES VINCENT B. SIGNATURE:
2015105857 CE/3
Activity
CPR#1

Terminologies to be defined:

1. Economics
- the social science that studies the production, distribution, and consumption of goods and
services. Economics focuses on the behavior and interactions of economic agents and how
economies work.
2. Engineering Economy (and who is the father)
- Engineering Economy is a collection of techniques that simplify comparisons of
alternatives on a economic basis. Eugene L. Grant is considered the founder of
engineering economy he discussed the importance of judgement factors and short-term
investment evaluation along with conventional comparisons of long-run investments in
capital goods based on compound interest calculations.
3. Engineering Economic Analysis (and who is the founder?)
- Engineering Economic Analysis is a breakdown of the various options for an
engineering project based on its overall cost. Arthur Jr. Lesser is the founder and editor
of engineering economists which includes the engineering economic analysis.
4. Consumer goods / Services
- are any tangible commodity produced and subsequently purchased to satisfy the
current wants and perceived needs of the buyer.
5. Producer Goods / Services
- are goods manufactured and used in further manufacturing, processing or resale.
6. Necessities
- is a good or service whose consumption is essential to human survival, or which is
considered indispensable for maintaining a certain minimum standard of living
7. Luxuries
- is a good for which demand increases more than proportionally as income rises, and is
a contrast to a “necessity good”, for which demand increases proportionally less than
income.
8. Demand
- a schedule of quantities of a good that will be bought per unit of time at various prices,
other things constant.
9. Supply
- a schedule of quantities a seller is willing to sell per unit of time at various prices,
other things constant.
10.Elastic Demand
- is when price or other factors have a big effect on the quantity consumers want to buy.
11.Inelastic Demand
- is when the demand for a product does not increase or decrease correspondingly with
a fall or rise in its price.
12.Unitary Elastic Demand
- a given percent shift in the price of the product results in an equal but opposite
percent change in the amount of product.
13.Perfect Competition
- situation prevailing in a market in which buyers and sellers are so numerous and well
informed that all elements of monopoly are absent
14.Monopoly
- a market structure in which one firm makes up the entire market.
15.Oligopoly
- a market structure in which there are only a few firms and firms explicitly take other
firm’s likely response into account; there are often significant barriers to entry.
16.Law of Supply and Demand
- law if supply is the quantity supplied rises as price rises, other things constant. Also,
can be stated as; Quantity supplied falls as price falls, other things constant.
- law of demand is the quantity demanded rises as price falls, other things constant.
Also, can be stated as: Quantity demanded falls as price rises, other things constant.
17.Law of Diminishing Returns
- a property of the relationship between the amount of a good or service produced, and
the amount of a variable factor required to produce it; the law says that when some
factors of production are fixed, increased production of the good eventually requires
ever-larger increases in the variable factor.
18.Valuation
- is the process of determining the current worth of an asset or a company
 Enumerate and give a brief description for each.

1. Functions and Uses of Engineering Economy

- application of engineering or mathematical analysis and synthesis to decision making
in economics
- the knowledge and techniques concerned with evaluating the worth of commodities
and services relative to their cost
- analysis of the economics of engineering alternatives

2. Engineering Economy Techniques

- Future Worth Analysis is very much like present worth analysis, dealing with future
worth rather than present worth situations.
- Payback period is an approximate analysis technique, generally defined as the time
required for cumulative benefits to equal cumulative costs.
- Sensitivity describes the relative magnitude of a particular variation in one or more
elements of a problem that is sufficient to change a particular decision.
- Breakeven analysis determines the conditions where two alternatives are equivalent

3. Engineering Economic Analysis Procedures

- Problem recognition, where problem must be well understood and stated in an explicit
form before the project team proceeds with the rest of the analysis.
- Development of the feasible alternatives, where searching for alternatives, screening
them to select a smaller group of feasible alternatives for detailed analysis.
- Development of the outcomes and cash flows for each alternative. Cash flow
approach, non-monetary factors meeting or exceeding customer expectations, safety to
employees, employee’s satisfaction, etc.
4. Intangible Values
- is based on the market's perception of whether a company is likely to keep its
promises about future growth.
-Identifiable, intangible assets are those that can be separated on its own and can even
be sold by the company.
-Unidentifiable, intangible assets are those that cannot be physically separated from the
company, or do not have physical substance.
5. Costs
- is the combination of gains and losses of any goods that have a value attached to
them by any one individual.
-A direct cost is related to producing a good or service. A direct cost is the material,
labor, expense, or distribution cost associated with producing a product.
-A fixed cost is also associated with cost accounting. A fixed cost does not vary with the
number of goods or services a company produces.
-operating cost is an expense associated with day-to-day business activities and may be
variable or fixed. An example of an operating cost is a company's inventory
6. Payment
- is an economic transaction between the residents of the country and the rest of the
world

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