Muhammad Syamil Fakhri Bin Yunus

47829
Engineering Economy and Finance
Chapter 1

Q 1 . With example, define Engineering economy and Finance

Ans : Engineering Economy is about determining the economic factors and
the economic criteria utilized when one or more alternatives are considered for
selection. It also can be define as a collection of mathematical techniques that
simplify economic comparisons.
For example, president of two small businesses play golf each week. After
several conversations, the have decided that, due to their frequent commercial
airline travel around the region, they should evaluate the purchase of a plane
jointly owned by the two companies. What are some of the typical economic
based questions the two presidents should answer as they evaluate the
alternatives to
1st alternative co own a plane or
2nd continue as is?

Finance is define as the management, creation and study of money,

banking, credit, investments, asset and liabilities that make up financial systems,
as well as the study of those financial instruments.
For example, a friend of you planning to buy a new car. At Toyota centre, he have
been introduced with several car loan plan. As someone who work in financial
company,

Q 2 . With example, state the meaning of micro and macro economy.

Ans : Microeconomic is the study of how individual consumers and producers
make their decisions and allocation of resurces. For example, how these
individuals trade with one another and how prices are affected by the supply and
demand of goods.
Macroeconomics is a branch of the economics field that studies how the
aggregate economy behaves. For example, an unemployment rates.

Muhammad Syamil Fakhri Bin Yunus

47829

Q 3. With example, define economic efficiency.

Ans: Economic efficiency define as an economic state in which every resource
is optimally allocated to serve each individual or entity in the best way while
minimizing waste and inefficiency. For example, the cost of making the product is
(system input) higher than the price of the product (system output) itself will
result a less than 1 economic efficiency. This will result a loss in company. The
economic efficiency should be greater than 1 to make a profit in a company.

Q4. Demonstrate the use of physical efficiency in engineering.

Ans:

physical ( efficiency )=

systemoutput ( s)
systeminput ( s)

It is mainly to calculate the loss of material. If the result is zero, it state that the
production of the process is nothing and all the material is gone to waste where
else if the result is one, meaning that the product does not have any waste
throughout the process. In reality, there must be some loss throughout the
manufacturing process. Hence, it is preferred to get a physical efficiency as
nearer as 1, but not less than 0.5.

Q 5. State difference between engineering economy and engineering finance.

Ans: Engineering Economy is about determining the economic factors and
the economic criteria utilized when one or more alternatives are considered for
selection where as Engineering Finance is define as the study of the
management, creation and study of money, banking, credit, investments, asset
and liabilities that make up financial systems, as well as the study of those
financial instruments.