Prelim Exam - Engineering Economics

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| By Ailene De
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Ailene De
Community Contributor
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Questions: 10 | Attempts: 304

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Prelim Exam - Engineering Economics - Quiz

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Questions and Answers
  • 1. 

    An electric power plant uses solid waste for fuel in the production of electricity. The cost y in dollars per hour to produce electricity is , where X is in megawatts. Revenue in dollars per hour from the sale of electricity is  . Find the value of x that gives maximum profit.

  • 2. 

    The fixed costs incurred by a small genetics research lab are $(200,000-30N) per year. Variable costs are (60+(N/2))% of the annual revenue. If annual revenue is $300,000, the annual profit/loss is most nearly?

  • 3. 

    In a gold mining area in Davao the ore contains, on the average one ounce of gold per ton. One method of processing “A” costs P(1,500-N) per ton and recovers 90% of the gold. Another method "B" costs only P(1,200+N) per tom and recovers 80% of the gold. If gold can be sold for P4,000 per ounce, which method is better and by how much?

  • 4. 

    Five years ago, a house was purchased for P34,000. If it is sold today for P(50,000+20N), what is the rate of appreciation of its value.

  • 5. 

    An amount of P3,000 is invested for (9+(N/2)) years at 6% compounded quarterly. Determine the amount of interest earned by the investment.

  • 6. 

    1. If P(10,000+200N) is invested at 12% interest compounded annually, determine how many years it will take to double.

  • 7. 

    1. If P(10,000+200N) is invested at 12% interest compounded annually, determine how many years it will take to double.

  • 8. 

    Optimal volume (demand) occurs when total costs equal total revenues. Is it true or false?

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    False. Optimal volume (demand) occurs when marginal revenue equals marginal cost, not when total costs equal total revenues. Total costs and total revenues may not necessarily be equal at the optimal volume.

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  • 9. 

    A related sunk cost will normally affect the prospective cash flows associated with a situation. Is it true or false?

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    A related sunk cost will not normally affect the prospective cash flows associated with a situation. Sunk costs are costs that have already been incurred and cannot be recovered, therefore they should not be considered when making decisions about future cash flows. Prospective cash flows should only take into account future costs and benefits that are relevant to the decision at hand.

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  • 10. 

    A nonrefundable cash outlay (e.g., money spent on a passport) is an example of an opportunity cost. Is it true or false?

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    A nonrefundable cash outlay is not an example of an opportunity cost. Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. In this case, the cash outlay for a passport is a direct expense and does not represent the value of an alternative option that is being given up. Therefore, the statement is false.

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