Engineering Economics & Management

1. Engineering Economics & Management swedishcr.weebly.com

2. Economics • The study of how the forces of supply and demand allocate scarce resources. Subdivided into microeconomics, which examines the behavior of firms, consumers and the role of government; and macroeconomics, which looks at inflation, unemployment, industrial production, and the role of government. swedishcr.weebly.com

3. Management • The group of individuals who make decisions about how a business is run. • The process of coordinating work activities so that they are completed efficiently and effectively with and through other people is known as mangement. swedishcr.weebly.com

4. Management function • Planning • Organizing • Staffing • Leading • Controlling swedishcr.weebly.com

5. Engineering Economics definition Definition: (industrial engineering) Application of engineering or mathematical analysis and synthesis to decision making in economics. The knowledge and techniques concerned with evaluating the worth of commodities and services relative to their cost. Analysis of the economics of engineering alternatives. swedishcr.weebly.com

6. Definition of 'Microeconomics • The branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, microeconomics focuses on patterns of supply and demand and the determination of price and output in individual markets (e.g. coffee industry). swedishcr.weebly.com

7. Definition of 'Macroeconomics The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. swedishcr.weebly.com

8. Consumer Goods • Goods, such as food and clothing, that satisfy human wants through their direct consumption or use. swedishcr.weebly.com

9. Producer Goods • goods (as tools and raw materials) used to produce other goods and satisfy human wants only indirectly . • Goods, such as raw materials and tools, used to make consumer goods. swedishcr.weebly.com

10. Market • An actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter. • Markets include mechanisms or means for (1) determining price of the traded item, (2) communicating the price information, (3) facilitating deals and transactions, and (4) effecting distribution. The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it. swedishcr.weebly.com

11. Perfect competition • The theoretical free-market situation in which the following conditions are met: (1) buyers and sellers are too numerous and too small to have any degree of individual control over prices, (2) all buyers and sellers seek to maximize their profit (income), (3) buyers and seller can freely enter or leave the market, (4) all buyers and sellers have access to information regarding availability, prices, and quality of goods being traded, and (5) all goods of a particular nature are homogeneous, hence substitutable for one another. Also called perfect market or pure competition. swedishcr.weebly.com

12. Types of cost • First Cost: Cost to get activity started such as property improvement, transportation, and initial expenditure. • Operation Maintenance Cost: They are experienced continually over the useful life of activity. swedishcr.weebly.com

13. Fixed Cost • A periodic cost that remains more or less unchanged irrespective of the output level or sales revenue, such as depreciation, insurance, interest, rent, salaries, and wages. • While in practice, all costs vary over time and no cost is a purely fixed cost, the concept of fixed costs is necessary in short term cost accounting. Organizations with high fixed costs are significantly different from those with high variable costs. This difference affects the financial structure of the organization as well as its pricing and profits. The breakeven point in such organizations (in comparison with high variable cost organizations) is typically at a much higher level of output, and their marginal profit (rate of contribution) is also much higher. swedishcr.weebly.com

14. Variable Cost • A cost of labor, material or overhead that changes according to the change in the volume of production units. Combined with fixed costs, variable costs make up the total cost of production. While the total variable cost changes with increased production, the total fixed costs stays the same. swedishcr.weebly.com

15. Incremental or Marginal cost The cost associated with one additional unit of production. also called marginal cost. Incremental (or marginal) cost is the additional expenses that will be incurred from increased output in one or more system units (I.e. Production increase). It is determined from the variable cost swedishcr.weebly.com

16. Sunk Cost A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business may face, such as inventory costs or R&D expenses, because it has already happened. Sunk costs are independent of any event that may occur in the future. swedishcr.weebly.com

17. Life Cycle cost • This is cost for the entire life-cycle of a product, and includes feasibility, design, construction, operation and disposal costs. swedishcr.weebly.com

18. Capital • Cash or goods used to generate income either by investing in a business or a different income property. • The net worth of a business; that is, the amount by which its assets exceed its liabilities. • The money, property, and other valuables which collectively represent the wealth of an individual or business. swedishcr.weebly.com

19. Price • A value that will purchase a finite quantity, weight, or other measure of a good or service. • the quantity of one thing that is exchanged or demanded in barter or sale for another. • the amount of money given or set as consideration for the sale of a specified thing. swedishcr.weebly.com

20. Interest • The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate. Here, interest per year divided by principal amount, expressed as a percentage. also called interest rate. The return earned on an investment. Partial or total ownership in an asset. • A fee paid for the use of another party's money. To the borrower it is the cost of renting money, to the lender the income from lending it swedishcr.weebly.com

21. Type of Interest • Nominal interest Rate: It is expressed on annual basis, financial institutions refer to this rate as annual percentage rate. • Effective Interest rate: It is an interest rate that is compounded using a time period less than a year. swedishcr.weebly.com

22. Wages • Payment for labor or services to a worker, especially remuneration on an hourly, daily, or weekly basis or by the piece. • wages Economics The portion of the national product that represents the aggregate paid for all contributing labor and services as distinguished from the portion retained by management or reinvested in capital goods. swedishcr.weebly.com

23. Monopoly • A situation in which a single company owns all or nearly all of the market for a given type of product or service. This would happen in the case that there is a barrier to entry into the industry that allows the single company to operate without competition (for example, vast economies of scale, barriers to entry, or governmental regulation). In such an industry structure, the producer will often produce a volume that is less than the amount which would maximize social welfare. swedishcr.weebly.com

24. Oligopoly • market a small number of participants who are able to collectively exert control over supply and market prices. • A situation in which a particular market is controlled by a small group of firms. . An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market. swedishcr.weebly.com

25. 'Gross Domestic Product - GDP' • The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. • GDP = C + G + I + NX • where: • "C" is equal to all private consumption, or consumer spending, in a nation's economy • "G" is the sum of government spending • "I" is the sum of all the country's businesses spending on capital • "NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports) swedishcr.weebly.com