Chapter 1

Question 1

What characteristics define problems suitable for engineering economic analysis?

Answer 1

1. The problem is important enough
2. It requires organization and forethought
3. It has important economic aspects

Question 2

9-step rational decision-making approach

Answer 2

1. Recognize the problem
2. Define the objective
3. Assemble relevant data
4. Identify feasible alternatives
5. Select criteria
6. Construct a model
7. Predict outcomes
8. Choose the best alternative
9. Audit results

Question 3

3 types of costs and benefits

Answer 3

• Market consequences
• Extra-market consequences (shadow prices)
• Intangible consequences

Question 4

What two alternatives are often overlooked?

Answer 4

1. “Do nothing” alternatives
2. “Temporary solution” alternatives