It all depends on the scalability requirements for your app, and the amount 
of time you are ready to spend in performing administration and set up of 
your compute engine instance. You are right, costs would differ between app 
engine and compute engine. You may gather more detail on the "Building 
Scalable and Resilient Web Applications on Google Cloud Platform" page 
<https://cloud.google.com/solutions/scalable-and-resilient-apps>. 

Otherwise, your questions may be reduced to one: the differences between 
GAE and GCE. A comprehensive answer 
<https://stackoverflow.com/questions/22697049/what-is-the-difference-between-google-app-engine-and-google-compute-engine>
 
to the "What is the difference between Google App Engine and Google Compute 
Engine?" may be found in stackoverflow. 

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