ECONOMICS FOR ENGINEERING
QUESTION 2014
(Multiple Choice Type Question)
1) Which of the following statements is correct?
a) engineering economics provides a set of methods by which economic worth of alternatives can be compared
b) engineering economics never takes into account non-commercial considerations
c) engineering economics does not take into consideration tax liabilities of the firm
d) engineering economics is not applicable in the case of public sector undertakings
Ans-A
ii) The Opportunity Cost of a good is
a) the time lost in finding it
b) the quantity of other goods sacrificed to another unit of that good
c) the expenditure on the good
d) the loss of interest in using saving
Ans-B
iii) Return of shareholders' fund is determined by which of the following formula?
a) net profit after tax I shareholders' fund b) net profit after ux I shareholders' equity
c) net profit before I shareholders' fund d) net profit before tax I shareholders' equity
Ans-A
iv) Margin of safety is equal to
a) actual sales minus BEP sales b)BEP sales minus Actual sales
c) actual sales minus Actual cost d)none of these
Ans-A
v) Patent is an example of
a) current asset b)fixed asset
c) fictitious asset d)intangible asset
Ans-D
vi) The value of the Power-Sizing Exponent (E) indicates Diseconomies of Scale when
a) 0<=E<1b) E > I c) E < 0 d) E = l
Ans-B
vii) If A and B are two mutually non-exclusive events, then P (A or B) is
a)P(A) x P(B) b)P(A)+P(B)
c) P(A)+P(B)-P(A)P(B) d)P(A)P(B)-P(A)-P(B)
Ans-B
viii) Current Ratio is the ratio of
a) Current Assent by Current Liabilities b) Current Liabilities by Current Asset
d) Current Capital by Current Liabilities c) Current Capital by Current Asset
Ans-A
9) In decision-making risk is measured by
a) expectation b) mean c) variance d) median
Ans-C
ECONOMICS FOR ENGINEERING
QUESTION 2015
(Multiple Choice Type Question)
1)Contribution margin is the
a) excess of sale price over variable costs
b) excess of sale price over fixed costs
c) excess of sale price over both variable and fixed costs
d) none of these
Ans-A
2) The firm's decision to invest its funds in fixed and long term assets is known as
a) Assets Planning b) Capital Budgeting
c) Long Term Budgeting d) Short Term Budgeting
Ans-B
3) Which of the following balance appears on the debit side of the Trial Balance?
a) A loss b) An expenditure c) An Asset d) All of these
Ans-D
4) In Double Entry System of Book Keeping every business transaction affects
a) two accounts b) two sides of same account
c) the same account on two different dates d) all of these
5) In this method we start with the higher rate of depreciation in the first year of the life of the assets ad reduce this rate in succeeding periods till its year of salvage.
a) Straight line method b) Reducing balance method
c) Sum of the years digit method d) Sinking fund method
Ans-C
6) Annualized capital recovery cost is defined as
a) C (A/P, i, n ) + S (A/F, i, n)
c) -C(A/P, i, n) + S(A/F, i, n)
b) -C(A/P, i, n)+ S(A/F, i,n)
d) C(A/P, i, n) -S(A/F, i,n)
Ans-D
7) A numerical description of the outcome of an experiment is called a
a) Descriptive statistic b) Probability Function
c) Variance d) Random Variable
Ans-B
8)The example of Replacement problem is
a) Obsolescene b)Deplection
c) Deterioration due to aging d) All of these
Ans-D
9) What is the full form of PVIF?
a) Present Value income Factor b)Present value interest Factor
c) Profit Value income Factor d) None of these
Ans-B
10) If actual sales are Rs. 40,000 and SEP sales are Rs. 30,000, the Margin of Safety is Rs
a) 70,000 b) 10,000 c) 1,40,000 d) 15,000
Ans-B
11) FVIF5%3 =
a) 1.050 b) 1.103 c) 1.158 d) 1.216
Ans-C
12) In Replacement Analysis, the existing asset which is considered for replaceme nt is called__________asset.
a) challenger b) striker c) winger d) defender
Ans-D
ECONOMICS FOR ENGINEERING
QUESTION 2016
(Multiple Choice Type Question)
1)Accounting Equation is
a) Capital= Assets - Liabilities
c) Assets = Capital - Liabilities
b) Liabilities - Capital - Assest
d) none of these
Ans-A
2)A person if deposits Rs 50,000 in a bank at an interest of 10% compounded annually, then future value at the end of 5 years will be
a) 60,525 b) 70,525 C) 85,525 d)90,525
Ans-A
3)If in a power sizing model the power sizing index is greater than 1, then
a)Per unit price increases with increase with increase in quantity
b)Per unit price decreases with increase with increase in quantity
c)Per unit price remains with increase with increase in quantity
d)Per unit price remains with increase with decrease in quantity
Ans-A
4) If A and B are two independent events then it can be expressed as
a) P(AUB) b) P(AxB) c)P(A)xP(B) d) none of these
Ans-C
5) Which are the determinants of economic life of an asset?
a) Capital recovery cost b) Average operating and maintenance cost
c) Sum of capital recovery cost d) all of these
Ans-D
6) What is the relation between the slopes of Total Cost (TC) and Total Revenue (TR) cu rves?
a) Slope of TR> Slope of TC b) Slope of TR< Slope of TC
c) Slope of TR = Slope of TC d) No fixed relation
Ans-D
7) A portion of the learning curve is
a) Parallel to y axis b) Parallel to x axis
c) Cuts the x axis d) Cuts the y axis
Ans-C
8) If the inflation rate is 6% per year and the market interest rate is known to be 15% per year,
what is the implied real interest rate in this inflationary economy?
a) 11.45% b) 9.00% c) 8.49% d) 8%
Ans-C
9) Sunk cost is
a) Original investment + depreciation - repairing expenses
b) Original investment- depreciation+ repairing expenses
c) Original investment + depreciation + repairing expenses
d) Original investment - depreciation - repairing expenses
Ans-C
10) Which of the following is not applicable to bottom-up approach to cost estimation?
a) The project under consideration is considered at the highest aggregate level
b) The project under consideration is split into smaller parts and their respective components are identified
c) Cost estimates are made for each component of each small part and added up
d) Cost estimates are made for each component of each part of the project and are added up to arrive at the total
Ans-A
11) A deposit of Rs. 1, 1O,000 was made for 31 days. The net interest after deducting 20
withholding tax is Rs. 890.36. Find the rate of return annually.
a) 12.25 b) 12.75 c) 11.75 d) 11.95
ANS-D
12) If Index Number for a certain period is equal to 100, then
a) Price are increasing b) Prices are decreasing
c) Prices remain constant d) Change in price cannot be predicted
Ans-C
ECONOMICS FOR ENGINEERING
QUESTION 2017
(Multiple Choice Type Question)
1) Cost reflected in accounting system only 1s called
a) Cash cost b) Overhead cost c) Book cost d) Direct cost
Ans-C
2) The opportunity cost of a good is
a) the time lost in finding it
b) the quantity of other goods sacrificed to the another unit of that good
c) the expenditure on the good
d) the loss of interest in using saving
Ans-B
3) Which one is the right Accounting Equation?
a) Assets - Liabilities = Capital
c) Assets + Capital = Liabilities
b) Assets + Liabilities - Capital
d) None of these
Ans-A
4) Inflation makes
a) future rupees less valuable than present rupees
b) future rupees more valuable than present rupees
c) future rupees equal to present rupees
d) none of these
Ans-A
5) If A and B are two independent events then P (A and 8) 1s
a) P(A)xP(B) b)P(A)+P(B) c)P(A)/P(B) d) P(A)-P(B)
Ans-A
6) To compute the construction cost per square foot of a building
a) per unit model will be used b) segmenting model wi11 be used
c) learning curve estimation process will be used d) none of these
Ans-A
7) Which one 1s fixed cost?
a) Oeprec1at1on of fixed assets
c) Cost of advertising
b) Excise duty
d) Sales tax
ANs-C
8) Which one of the following is helpful for measuring inflation?
a) Learning curve b) Segmentation model
c) Consumer price index d) MARR (Minimum Attractive Rate of Return)
Ans-C
9) In a decision tree arrows coming out of which node have probabilities?
a) Decision node b) Random node
c) Both (a) and (b) d) None of these
Ans-D
10) The present worth of an alternative is 0. What do we know about the value of the future worth?
a) FW <0 b) FW =0 c) FW >0
d) Cannot be determined without cash flows
Ans-B
11) If the inflation rate is 6% per year and the market interest rate is known to be 15% per year,
what is the implied real interest rate in this inflationary economy?
a) 11.45% b) 9.00 % c) 8.49% d) 8%
Ans-C
12) A machine worth Rs. 1,00,000 is purchased by paying Rs. 20,000 down payment and 12
monthly installments of Rs. 8,000 each. The book cost at the time of purchase is
a) Rs 1,00,000 b) Rs. 8,000 c) Rs. 80,000 d) Rs 12.000
Ans-A
ECONOMICS FOR ENGINEERING
QUESTION 2018
(Multiple Choice Type Question)
1)What is true the relationship between AC and MC?
a)AC cuts MC from below b) MC cuts AC from below
c) MC, and AC do no cut each other d) AC equals MC when AC is at its maximum
Ans-B
2) If Current Ratio is 2.2 and Current Liabilities is Rs 80,000 then the amount of current asset will be
a)Rs. 1,76,000 b)Rs. 1,34,000 c)Rs. 1,60000 d)Rs.1,72,000
Ans-A
3) In replacement analysis is old machines are known as
a) Defender b) Challenger c) Both (a) and (b) d) None of these
Ans-A
4) At Break-even point
a) Total revenue= Total Cost
c) Total revenue= Total Vanable Cost
b) Total revenue = Total Fixed Cost
d) All of the above
Ans-A
5) Demand-pull 1nflation may be caused by
a) An increase in costs
b) A reduction in government spending
c) A reduction in interest rates
d) An outward shift in aggregate supply
Ans-C
6) Goodwill 1s a
a) Fixed asset b) Current asset
c)Fictitious assest d)Wasting assest
Ans-A
7) A large angle of incidence indicates
a) A low rate of profit
b) high rate of profit
c)No profit,no loss
d) None of the above
Ans-B
8) A card is drawn from a deck of 52 cards. Find the probability that it is either a red king or a black queen.
a) 2/13 b) 1/13 c) 5/13 d) 8/13
Ans-B
9) IRR stands for the rate of return for which
a)NPV=O b)NPV=l c)NPV=-1 d) NPV 1s maximum
Ans-A
10) The present value of 1 to be received after 3 years compounded annually at 10%
a) 0.909 b) 0.826 c) 0.751 d) None of these
Ans-C
11) A uniform series of payment occurring at equal interval of time 1s called ____
a) Annuity b) Amortization c) Depreciation d) Bond
Ans-A
12) The following value(s) of the Power-Sizing Exponent (E) indicates Economies of scale
a) 0 < E <I b) E > 1 c) E = 0 d) E 1
Ans-A
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