EngEcon_Mod1_Quiz

Which best describes the role of economics in decision making?

• It focuses solely on maximizing revenue
• It balances costs and benefits to achieve optimal results
• It emphasizes only minimizing costs
• It ignores financial constraints

Which of the following best illustrates the link between ethics and economics?

• Maximizing profit regardless of environmental damage
• Ensuring decisions are both financially sound and socially responsible
• Choosing the cheapest supplier without quality checks
• Ignoring worker safety to save costs

Which statement about interest rate and rate of return is correct?

• Interest rate is always higher than rate of return
• Rate of return measures profitability; interest rate is the cost of borrowing
• Both terms mean the same thing
• Interest rate applies only to loans

In engineering economics, the symbol i typically represents:

• Inflation rate
• Interest rate per period
• Internal rate of return
• Initial investment

Which of the following is an example of a cash flow?

• A machine depreciating in value
• A loan repayment made monthly
• A product’s design blueprint
• A company’s organizational chart

Economic equivalence means:

• Different amounts of money at different times have the same value under a given interest rate
• All investments yield the same returns
• Cash flows are equal each year
• Money loses value over time due to inflation

Under simple interest, interest is calculated:

• On the original principal only
• On the principal and accumulated interest
• On the inflation-adjusted principal
• On both principal and taxes

Minimum Attractive Rate of Return (MARR) is best described as:

• The lowest rate an investor is willing to accept for an investment
• The average inflation rate over a project’s life
• The current prime lending rate
• The company’s maximum profit margin

Opportunity cost is:

• The difference between simple and compound interest
• The benefit foregone by choosing one alternative over another
• The cost of producing one more unit
• The interest paid on a loan

In personal finance, investing differs from spending in that:

• Investing aims to generate future income or capital gains
• Spending always results in higher net worth
• Investing decreases future financial security
• Spending focuses on long-term asset growth