Multiple-Choice Questions (MCQs)

1. What does the law of demand state?

a) As the price increases, demand increases.
b) As the price decreases, demand decreases.
c) Higher prices lead to lower demand, and lower prices lead to higher demand.
d) Prices and demand are unrelated.
Answer: c
2. What is "perfect competition"?
a) A market with no sellers.
b) A market where a single buyer influences prices.
c) A market where no single buyer or seller can affect the price.
d) A monopoly dominated by one seller.
Answer: c
3. What is the primary factor that causes movement along the demand curve?
a) Income changes
b) Change in price of goods
c) Population growth
d) Advertising campaigns
Answer: b
4. Which curve represents the relationship between price and quantity supplied?
a) Demand curve
b) Equilibrium curve
c) Supply curve
d) Price curve
Answer: c
5. What causes a rightward shift in the demand curve?
a) Decrease in income
b) Increase in the price of substitutes
c) Decrease in the population
d) Increase in the cost of production
Answer: b
6. What is the equilibrium price?
a) The price where demand exceeds supply
b) The price where supply exceeds demand
c) The price where quantity demanded equals quantity supplied
d) The price where producers make maximum profit
Answer: c
7. What does price elasticity of demand measure?
a) The relationship between supply and revenue
b) The sensitivity of demand to price changes
c) The cost of production relative to profit
d) The quantity supplied at different prices
Answer: b
8. Which goods are considered "inferior goods"?
a) Goods with high brand value
 b) Goods for which demand increases as income falls
c) Goods that are luxury items
d) Goods with no substitutes
Answer: b
9. What is the impact of a fall in production costs on the supply curve?
a) It shifts the curve inward to the left.
b) It shifts the curve outward to the right.
c) It causes no change in the curve.
d) It decreases the equilibrium quantity.
Answer: b
10. What is income elasticity of demand?
a) The relationship between price and production
b) The responsiveness of demand to changes in consumer income
c) The impact of supply changes on equilibrium price
d) The relationship between substitutes and complements
Answer: b

Fill-in-the-Gap Questions

1. The law of ________ states that as the price of goods increases, the quantity demanded
decreases.
Choices: supply, elasticity, equilibrium, demand
Answer: demand
2. Perfect competition exists when no single buyer or seller can influence the ________.
Choices: quantity, equilibrium, price, cost
Answer: price
3. A downward sloping demand curve represents an inverse relationship between price and
________.
Choices: cost, profit, supply, quantity demanded
Answer: quantity demanded
4. A shift to the left in the supply curve is often caused by higher ________ costs.
Choices: labor, transportation, production, tax
Answer: production
5. A ________ good is one for which demand increases as consumer income rises.
Choices: substitute, inferior, normal, complementary
Answer: normal
6. The ________ price is where quantity supplied equals quantity demanded.
Choices: market, fixed, optimal, equilibrium
Answer: equilibrium
7. Price elasticity of demand is ________ when a change in price leads to a more than
proportional change in demand.
Choices: inelastic, elastic, fixed, dynamic
Answer: elastic
8. A ________ demand curve shift indicates an increase in demand at all price levels.
Choices: rightward, leftward, static, decreasing
Answer: rightward
9. ________ goods are consumed more during recessions due to lower consumer incomes.
Choices: Normal, Luxury, Inferior, Durable
Answer: Inferior
10. Income elasticity of demand can be ________ when an increase in income reduces
demand for a good.
Choices: negative, neutral, positive, constant
Answer: negative
Multiple-Choice Questions (MCQs)

1. What is the main purpose of investment assessment in engineering economics?

a) To minimize project timelines
b) To maximize resource utilization
c) To evaluate the feasibility and profitability of projects over time
d) To increase the size of the workforce
Answer: c
2. Which type of investment focuses on replacing outdated tools with modern ones
before their economic life expires?
a) New investments
b) Renewal investments
c) Modernization investments
d) Expansion investments
Answer: c
3. What is the formula for calculating the break-even point?
a) Fixed Costs / (Selling Price per Unit − Variable Cost per Unit)
b) Selling Price per Unit × Fixed Costs
c) Variable Costs × Total Revenues
d) Total Costs − Selling Price per Unit
Answer: a
4. What does "economic life" refer to in investment assessment?
a) The time required for asset approval
b) The optimal period for using equipment before replacement
c) The life span of a company’s financial investments
d) The average repair cost of an asset
Answer: b
5. Which depreciation method allocates higher depreciation in the early years of an
asset's life?
a) Straight-Line Method
b) Declining Balance Method
c) Units of Production Method
d) Fixed Depreciation Method
Answer: b
6. What is "salvage value"?
a) The cost of repairs over an asset's lifespan
b) The residual value of an asset at the end of its economic life
c) The replacement cost of an asset
d) The revenue from operating an asset
Answer: b
7. What type of investment is made to establish a completely new facility?
a) Modernization investment
b) Expansion investment
c) New investment
d) Renewal investment
Answer: c
 8. What does replacement analysis help determine?
a) The cost of salvaging an asset
b) The optimal time for replacing assets
c) The total cost of operating an asset
d) The break-even point of investments
Answer: b
9. Which factor increases as an asset ages, influencing replacement decisions?
a) Scrap value
b) Maintenance costs
c) Depreciation rates
d) Economic efficiency
Answer: b
10. What is technological obsolescence?
a) The physical wear and tear of an asset
b) When an asset becomes inefficient due to advancements in technology
c) The increase in asset value due to innovation
d) The reduction of operational costs through modernization
Answer: b

Fill-in-the-Gap Questions

1. The ________ analysis identifies the point at which total revenue equals total costs.
Choices: investment, break-even, expansion, renewal
Answer: break-even
2. ________ investments are aimed at increasing the production capacity of an existing
facility.
Choices: New, Expansion, Renewal, Modernization
Answer: Expansion
3. The ________ value of an asset is the estimated residual value at the end of its useful life.
Choices: scrap, market, depreciation, maintenance
Answer: scrap
4. ________ costs are expenses incurred to keep an asset operational and in good condition.
Choices: Maintenance, Periodic, Economic, Replacement
Answer: Maintenance
5. The ________ method distributes the cost of an asset evenly over its useful life.
Choices: Declining Balance, Straight-Line, Units of Production, Salvage
Answer: Straight-Line
6. The ________ rate is the minimum return expected from an investment.
Choices: depreciation, interest, maintenance, replacement
Answer: interest
7. ________ investments involve replacing outdated machinery or equipment.
Choices: Renewal, Modernization, Expansion, New
Answer: Renewal
8. ________ obsolescence occurs when an asset becomes outdated due to technological
advancements.
Choices: Physical, Technological, Economic, Operational
Answer: Technological
9. Investment parameters include investment amount, periodic revenues, and ________.
Choices: wages, expenses, scrap value, taxes
Answer: scrap value
10. Evaluating the ________ life of investments helps minimize costs and maximize returns.
Choices: financial, economic, operational, useful
Answer: economic
2. Hakan Button Collective Company will buy the press device to use in the
production of metallic buttons. The cash flows and purchases are given below.
Should investment be made for this device? If the risk factor is applied based on
α = 0.10, will the project be accepted again?

Purchase Cost 400.000 TL

Annual Experience Cost 30.000 TL
Cash inflow per year 170.000 TL
Scrap value 100.000 TL
Capital Cost 25%
Economical Life 6 years

8
3. Turan Limited Company has a production capacity of 500 br /
year and plan to produce 250-unit computers for 2020. A computer
should be sold for 3.000 TL. The fixed and variable expenses
associated with this production program are as follows.
What will be the break-even point of this company?

Q=S/(P-D)

Fixed Costs Variable Costs

Administrative 50.000 TL Energy, Labor 750 TL
Expenses
Rent, Taxes 150.000 TL Raw Materials 500 TL
4. Mr. Ahmet did not pay the 500 TL property tax on time, which he
had to pay at the end of 2014. This person who will make the payment
at the end of 2019 with a compound interest rate of 25%. Calculate the
total payment amount.
5. ISTANBUL company will establish a facility producing computer by spending
200.000 TL in the first year, 150.000 TL in the second year, there is no investment
in the third year, 400.000 TL in the fourth year and 500.000 TL in the fifth year.
The cost of capital is 20%. What is this total investment amount?
6. A casting company is considering the replacement analysis of a
furnace. If it is bought from X factory, annual operating and
maintenance costs will be 50.000 TL/year. It can be kept for 5 years.
Purchase cost is 300.000 TL. Scrap Value is 15.000 TL.

If furnace is bought from Y factory, annual operating and

maintenance cost will be 30.000 TL/year. Economical life of this
machine is same with X factory. Purchase cost is 250.000 TL and
Scrap Value is 25.000 TL.

If the capital cost is 25% for two factories, which one would you
choose?
7. A casting company is considering the replacement analysis of a
furnace. If it is bought from X factory, annual operating and
maintenance costs will be 50.000 TL/year. It can be kept for 10
years. Purchase cost is 300.000 TL. Scrap Value is 15.000 TL.

If furnace is bought from Y factory, annual operating and

maintenance cost will be 30.000 TL/year. Economical life of this
machine is 5 years. Purchase cost is 250.000 TL and Scrap Value is
25.000 TL.

If the capital cost is 25% for two factories, which one would you
choose?