CE-40-2/A2

May 25, 2022

MORALES, Medwin Miguel Mirande Signature
Student Number CE/3
M1-CPR
CLASS PRODUCED REVIEWER

SOLUTION

TERMS TO BE DEFINED:

1. Economics – this is the part of our world that we can see in our daily lives that is define as a form of social
study that deals with goods and services, the production of goods, how it is distributed, and lastly, how is it
consumed.
2. Engineering Economy (and who is the father?) – Engineering economics is another field of economics that
deals with the analysis of economics in the engineering field. Engineering economy focuses on the
efficiency of people and companies with limited resources to work with. The father of engineering economy
is named Arthur M. Wellington.
3. Engineering Economic Analysis (and who is the founder?) – Engineering Economic Analysis consists of two
methods, structural procedure, and mathematical modelling approaches. Engineering Economic Analysis
focuses on the flow of cash flow, whether future or past. The information is valuable because it can
determine the exact amount of funds needed for a specific project. The founder of Engineering Economic
Analysis is none other than Arthur M. Wellington himself.
4. Consumer Goods / Services – Consumer Goods are tangible items than can be produced and be
purchased by a consumer to satisfy his or her needs. Consumer goods can be either the essentials such as
foods or water, to the wants of the consumer such as jewelry. Consumer goods can be classified as
durable, non-durable goods. The difference between durable and non-durable is the shelf life. Durable
goods are long lasting, while non-durable goods should be consumed or used immediately. Services are
consumer goods that are intangible.
5. Procedure Goods / Services - Procedure Goods are also known as intermediate goods. These types of
goods are usually used by businesses to produce other type of goods.
6. Necessities – these goods are always purchased by the consumer regardless the price inconsistencies that
the necessities would show. Necessities are always income sensitive for the consumer.
7. Luxuries – this type of goods are not always sought after by the consumer because this item leans towards
the “wants of the consumer, rather than the “needs”
8. Demand – demand is one of a core principle of economics which represents the desire of the consumer of
the goods or item and the willingness of the consumer to pay for said item.
 9. Supply – Supply is another core principle of economics that deals with the finite quantity of goods or
services that can be provided.
10. Elastic Demand – Elastic demand is the demand of the consumer that can easily be manipulated by the
change of goods or services.
11. Inelastic Demand – Inelastic demand is the type of demand that even if there is a change in price for the
good, the demand does not change. It is the opposite of elastic demand.
12. Unitary Elasticity – this type of elasticity between the price and demand is equally proportional with one
another.
13. Perfect competition – perfect competition is an occurrence when a situation of consumer and producers in
a market has diversity. Meaning that there is a balance with other producers in terms their customers.
14. Monopoly – monopolies are companies that are leading and drawing more consumers than other
producers. Monopolies eliminates the competition and in term reduces the diversity of products for the
consumers.
15. Oligopoly – oligopolies are defined as cluster of small business or firms that are connected and dependent
with one another in terms of pricing and output policies.
16. Law of Supply and Demand – this a theory that explains the relationship between the supply to the
consumers and the demand. The law states that when a supply increases, the demand decreases. It shows
an inversely proportional relationship.
17. Law of Diminishing Returns – this law states that there is a certain threshold that when exceeding said
threshold, the benefits dwindle, and it is considered not advisable to go over the threshold.
18. Valuation – this is an assessment or estimation of how valuable something really is.

ENUMERATE AND GIVE A BRIEF DESCRIPTION FOR EACH:

1. Functions and Uses of Engineering Economy.

• Linear programming
• Critical path economy
• Interest and money – time relationships

Engineering economy’s role is to ensure that the decision making or people who are in charge is the most
rational and is the best option given in any situation. Engineering economy has techniques to ensure that
the best course of action is taken, these actions are:

• Anticipation – this technique is used to anticipate the prices of materials and the demand of a
product.
• Estimation – this technique is used to estimate as accurately as possible the life and usage of a
product.
• Hypothesis testing

2. Engineering Economics techniques.

• Rate of return
• Net present value
• Benefit cost analysis
• Future worth analysis

3. Engineering Economic Analysis Procedures

• The first step in the procedure of analysis in engineering economics is to identify and to understand
the gravity of the situation and to know what the project goal is.
 • The next step is data collection process and the formulation of the solution for the situation.
• Next step is to create the projection for the cash flow.
• The next step is to evaluate the and to choose the best possible decision.
• The last step is to choose the best and viable option.
4. Intangible Values.
• Intangible values are items that has considerable high value but are not in a physical plane,
therefore cannot be touched. The examples of intangible Values are:
▪ Logos
▪ Valuable information
▪ Formulas
▪ Software
▪ Copyrights
5. Costs.
• Costs are the basically the fees that one should pay. These are necessary payments for any kind of
business, example of costs is:
▪ Average Cost – average costs is the total costs that is accumulated divided by the how
many unites are produced.
▪ Direct Costs – direct costs are the costs that is associated with the material and labor for
the project. This kind of costs are easily link to a specific operation.
▪ Indirect Costs – this kind of costs are like direct costs since it is associated with material
and labor. The difference is that it is impossible to link with a specific operation.
▪ Costs of Goods Sold – this type of costs is associated with the how much does an item is
produced and manufactured.
▪ Future costs – this type of costs is associated estimation for the costs that would come.
▪ Past costs – this are costs cost that are from the pasts. These are usually recorded for and
tallied for future use.
6. Overlapping Costs.
• This type of costs is obligatory and should be paid from one authority to another. Overlapping Costs
can influence the borrowing costs of a business of company.
7. Payments.
• Payments are the options of paying the costs of one’s company. There are numerous methods in
payments such as:
▪ Cheques – cheques are paper that when filled with the correct format, can be used to
ordered through the buyer’s account. The one who received the cheque can go to the
designated bank to acquire the money and can now transfer the money to the bank of the
receiver of the cheque.
▪ Debit Card – this is a card that is linked to the bank account of the owner of the card. This
can be used to pay or transfer money directly.
▪ Credit Card – credit cards is just like a debit card, but it is like a temporary payment and will
be charged with to the owner’s bank. The duration of the credit will be usually at the end of
the month and the user will receive a credit card statement.
REFERENCES

Blank, L., & Tarquin, A. (2008).Basics of Engineering Economy. McGraw-Hill Higher Education.

Hall, M. (2020). Elasticity vs. Inelasticity of Demand: What's the Difference? Retrieved from

https://www.investopedia.com/ask/answers/012915/what-difference-between-inelasticity-and-
elasticity demand.asp

Mojahed, M. & Daniel, Jay. (2009). Different Criteria by Using Engineering Economy techniques For Best Project

Selection in one of the Sector of Telecommunication in Iran. International Journal of Engineering and

Technology. 1. 121-124. 10.7763/IJET.2009.V1.22.

San, A. (2014). Engineering Economy. Retrieved from https://www.slideshare.net/srtu99ler/engineering-

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