Day 3 Flashcards
(89 cards)
It is the analysis and evaluation of the factors that will affect the success of engineering projects to the end that a recommendation be made which will ensure the best use of capital.
Engineering Economy
It is a market condition in which a product is traded freely by buyers and sellers in large numbers without any individual transaction affecting the price
Perfect Competition
It is an economic system based on the private ownership of the means of production and distribution of goods, characterized by a free competitive market and motivation by profit.
Capitalism
These are tangible things – things that you can touch – that satisfy human wants
Goods
these are activities that people do for themselves or for other people to satisfy their wants
Service
Products or services that are required to support human life and activities, which will be purchased in somewhat the same quantity even though the price varies considerably
Necessities
Products or services that are desired by humans and will be purchased if money is available after the required necessities have been obtained.
Luxuries
The quantity of a certain commodity that is bought at a certain price at a given place and time.
Quantity demanded (Demand)
The quantity of a certain commodity that is offered for sale at a certain price at a given place and time.
Quantity supplied (Supply)
Under conditions of perfect competition, the price at which a given product will be supplied and
purchased is the price that will result in the supply and the demand being equal.
Law of Supply and Demand
A theory in economics that predicts that after some optimal level of capacity is reached, adding an additional factor of production will actually result in smaller increases in output
“law of diminishing marginal returns” “law of diminishing returns”
“principle of diminishing marginal productivity”
“law of variable proportions”
Interest on an investment that is calculated once per period, usually annually, on the amount of the capital alone and not on any interest already earned.
Simple interest
Is the discount of one unit of principal per unit time
Rate of Discount, d
Basic annual rate of interest
Nominal Rate of Interest, r
Actual or exact rate of interest
earned on the principal during one-year period
EFFECTIVE RATE OF INTEREST (ERI)
A series of equal payments occurring
at equal interval of time
Annuity
a type of annuity where the payments are made at the end of each period beginning from the 1st period
Ordinary Annuity
a type of annuity where the payments are made at the beginning of each period starting from the 1st period.
Annuity Due
type of annuity where the first payment is made later than the first or is made several periods after the beginning of the annuity
Deferred Annuity
refers to the present worth of a property that is assumed to last forever; “sum of the first cost and the present costs of perpetual replacement, operation and maintenance”.
Capitalized Cost
decrease in the value of physical property due to passage of time
Depreciation
Due to the reduction of the physical ability of an equipment or asset to produce results
Physical Depreciation
a certificate of indebtedness of a corporation usually for a period not less than ten years and guaranteed by a mortgage on certain assets of the
corporation or its subsidiaries
Bond
Due to the reduction in the demand for the function that the equipment or asset was designed to render
Functional Depreciation or obsolescence