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Engineering Economics and Finance - 2 Marks - All 5 Units

Engineering Economics and Finance - 2 Marks - All 5 Units

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Published by Mohan Prasad.M

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Published by: Mohan Prasad.M on May 25, 2012
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ME 2342 - Engineering Economics and FinancePA College of Engineering and Technology, Mechanical Department 1
P.A. COLLEGE OF ENGINEERING AND TECHNOLOGY
 
PALLADAM ROAD, POLLACHI - 642 002DEPARTMENT OF MECHANICAL ENGINEERINGME 2342
ENGINEERING ECONOMICS AND FINANCE
 
TWO MARK QUESTIONS WITH ANSWERSACADEMIC YEAR 2012 - 2013Prepared ByMr.M.Mohan Prasad M.E., MBA
 
ME 2342 - Engineering Economics and FinancePA College of Engineering and Technology, Mechanical Department 2
UNIT - 1 INTRODUCTION TO ECONOMICSPART- A
1. What is elasticity of demand?
Elasticity of demand may be defined as the “degree of responsivenessof quantity demand to a change in price”.
 2.
Define the term “cost”?
 Cost may be defined as a total of expenses incurred, whether paid ofoutstanding in the manufacture and sale of a product.3. What is opportunity cost?Opportunity cost may be defined as the potential benefit that is givenup as you seek an alternative course of action. in other words, the expectedreturn or benefit for gone in rejecting one course of action for another.4. What do you mean by marginal cost?The institute of cost & works accounts of India defined marginal costas, the amount at any given volume of output by which aggregate costs are
changed if the volume of output is increased or decreased by one unit”.
 5. Explain marginal costing?Marginal costing is defined by the ICWA as, the ascertainment bydifferentiating between fixed cost and variable cost of marginal costs of theeffect on profit of changes in volume or type of output.6. What is meant by marginal revenue?The revenue that can be obtained from selling one more unit of productis called marginal revenue.7. Give a short note on sunk cost?A cost which was incurred or sunk in the past and is not relevant to theparticular decision making is a sunk cost or sunk loss. It may be variable orfixed or both.
 
ME 2342 - Engineering Economics and FinancePA College of Engineering and Technology, Mechanical Department 3
8. List out the elements of cost?The elements of cost
Materials
Labor cost
Expenses9. Define the term costing?The institute of cost and management accountants, (ICMA) Londonhas defined costing as
“ascertainment of costs”
it refers to the techniques andprocesses of ascertaining costs and studies the principles and rulesconcerning and determination of costs of products and services.10. What is break-even point?The break-even point is the volume of output at which neither a profit ismade nor a loss is incurred. It is a point where the total sales are equal to totalcosts.11. Write the formula to find p/v ratio?The formula for computing the p/v ratio is given below:P/v ratio=contribution/sales(Or)=fixed cost + profit/sales(Or)=sales-variable cost/sales12. List the formulas to find the margin of safety?Margin of safety=actual sales-sales at B.E.P(or)=profit/p/v ratio(or)=profit*sales/contribution13. What is fixed costs?Fixed costs means that the cost tends to be unaffected by the volumeof output. Fixed costs depend upon the passage of time& do not vary directlywith the volume of output. it is also known as period cost.(e.g.) rent & rates offactory buildings ,insurance of buildings etc.

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