ECON

Perfect Monopoly

What market structure features a single supplier of a unique product who can block entry?

Consumer Goods & Services

What do you call goods/service directly consumed to satify wants (e.g. food,clothing)?

Sunk Cost

What cost has already occurred and is irrelevant to future choices in analysis?

Price

What is the amount of money (or its equivalent) exchanged for a good or service?

Variable Cost

What cost category varies in total with level of output (e.g. material, direct labor)?

Perfect Competition

Name the market structure with many suppliers and free entry.

Recurring Cost

What do we call costs that repeat in ongoing operations?

Demand

Define the quantity of a commodity bought at a given price, place, and time.

Overhead Cost

What are plant operating costs that are not direct labor or materials (e.g. electricity, taxes)?

Incremental Costs

What do we call the extra cost or revenue from producing/selling one or more additional units?

Indirect Cost

What costs are difficult to attribute to a single output and must be allocated?

Opportunity Cost

What is the foregone benefit from the next best alternative use of limited resources?

Eng’G Economy

What term describes studying economic problems to achieve maximum profit at least cost?

Producer Goods & Services

What do we call goods/services used to produce other goods/services (e.g. machine tools)?

Supply

Define the quantity of a commodity offered for sale at a given place and time.

Rate of Return

What is the ratio name: Annual Net Profit divided by Capital Invested?

Non-Recurring Cost

What costs happen only once or are non-repetitve?

Sunk Costs

In replacement analysis, which past cost is ignored for future decisions?

Payback Period

What measure estimates years to recover investment as Capital Invested / Net Annual Cash Flow?

Working Capital

What do you call funds tied up in the current assets to start and support operations?

Sunk Cost

A company is evaluating two equipment alternatives. An amount already paid for the existing machine cannot be recovered and will not change regardless of which alternative is selected. Which concept describes this past expenditure?

Effective annual rate

A loan is quoted at 12% nominal interest compounded quarterly. Which quantity represents the actual annual rate earned or charged after accounting for quarterly compounding?

Annuity Due

A series of equal payments is made at the BEGINNING of every period for a specified number of periods. Which type of annuity is being described.

Capitalized Cost

A project required an initial construction cost plus recurring operating costs and periodic replacement costs extending indefinitely. The present worth of this entire perpetual cost stream is called..

Amortization

A debt is repaid through equal payments at equal time intervals, with each payment containing both interest and repayment of principal. Which concept best describes this process?

Declining Balance Method

An asset’s depreciation expense is calculated as a constant percentage of the book value at the beginning of each year. Which depreciation method is being used?

Law of diminishing returns

A manufacturer finds that increasing the number of workers while keeping a key production factor fixed eventually produces smaller-than-proportionate increases in output. Which economic principle applies?

Opportunity Cost

A firm gives up the opportunity to earn income from a limited resource because it chooses to use that resource for another project. The value of the forgone alternative is the:

Service Output Method

A depreciation method assumes that total depreciation is directly proportional to the quantity of output produced or operating hours used. Which method is this?

Equation of Value

An engineer compares a set of obligations by moving their values to the same selected date and setting the values of the two sides equal. Which concept is being applied?

True

(T/F) Under ordinary simple interest, interest is calculated using the principal only and does not include interest accumulated in preceding periods.

False

(T/F) For compound interest, interest for a period is calculated only on the original principal, regardless of previously accumulated interest.

True

(T/F) A nominal interest rate specifies both the stated annual rates and the number of compounding periods per year.

True

(T/F) An ordinary annuity has equal payment made at the end of each period, while an annuity due has payments at the beginning of each period.

True

(T/F) A perpetuity is an annuity whose payments continue indefinitely, and its present worth is represented by A/i under stated conditions.

False

(T/F) Capitalized cost includes only the original first cost of a property and excludes future operating, maintenance, and replacement costs.

True

(T/F) In an amortization schedule, the interest portion of a payment generally decreases as the outstanding principal balance decreases, assuming a fixed interest rate and equal periodic payments.

True

Straight-line depreciation assumes that the loss in value is directly proportional to the age of the property

True

(T/F) In the declining balance method, the depreciation charge each year is based on a fixed percentage of the book value at the beginning of that year.

True

(T/F) Under the service output method, depreciation is tied to actual use such as units produced or working hours, so depreciation can be lower during periods of low production.