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Which of the following statements is not one of the four fundamental principles of engineering economics?

(a) Receiving a dollar today is worth more than a dollar received in the future.
(b) To expect a higher return on investment, you need to take a higher risk.
(c) Marginal revenue must exceed marginal cost to justify any production.
(d) When you are comparing different alternatives, you must not focus only on differences in alternatives.

1 Answer

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Final answer:

The statement "When you are comparing different alternatives, you must not focus only on differences in alternatives" is not a principle of engineering economics. Instead, engineering economics values the analysis of differentiated aspects among alternatives to ensure financially sound decisions are made, using principles like opportunity costs and time value of money.

Step-by-step explanation:

The statement that is not one of the four fundamental principles of engineering economics is: "When you are comparing different alternatives, you must not focus only on differences in alternatives." This proposition does not align with the economic approach to decision-making in engineering, which emphasizes the importance of considering differentiated costs and benefits when comparing alternatives. Rather, the correct approach involves a comprehensive analysis that includes the evaluation of differential aspects among alternatives to make informed decisions.

Engineering economics is built upon a foundation of principles that guide the decision-making process. Key elements such as opportunity costs, time value of money, margin analysis, and comparative advantage play significant roles in evaluating the relative merits of choices in engineering projects. By highlighting the differences in alternatives, it enables decision makers to ascertain the most economically viable option that delivers maximum value or efficiency.

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