ECU 402: Engineering Economics Second Semester Examination

Engineering economics paper for the electrical and electronic engineering degree. Discusses benefit cost ratio, marginal rate of substitution, net present value, average cost and returns to scale with diagrams, then works a policy case in which raising the price of a pack of cigarettes from two hundred to six hundred shillings moves the quantity of marijuana demanded from two thousand to eight hundred kilograms a day, to the cross price elasticity of demand and why the policy proves effective. Establishes the relationship between marginal cost and average cost and its significance, and two depreciation methods each with an advantage and a limitation. Continues with the effect of an import duty on cars on the equilibrium price and quantity of petrol, three policies a developing country may use on a balance of payments problem, and the floating against the managed exchange rate regime with a recommendation. Computes the marginal utility of two goods from a utility function at a given income and prices, defines supply with two factors that shift its curve left, and analyses a rent ceiling on urban housing. Selects between two projects across boom, normal and recession states from their probability distributions, finds equilibrium price and quantity from demand and supply functions, lists four monetary tools the central authority uses to control inflation, separates a monopoly from an oligopoly with examples, gives two determinants of elasticity of demand, works straight-line depreciation on equipment bought for a million shillings over an eight-year life with a twenty thousand salvage value, and traces the consequence for the oil and motor vehicle market when exporters raise the price of fuel.