* Engineering economy is a subset of economics for application to engineering projects. * It is an economic approach in solving problems in engineering projects particularly for the assessment of project's investment. Importance of Study
* Engineer must take into account the monetary value in their invention as they have to position a firm to be the most profitable one * The aim is to balance the trade off between cost and performance in the most economical manner * Engineers play a major role in capital investment decisions based on their technical knowledge * To prevent a conflict between engineers and financial department Demand
* An economic principle that describes a consumer’s desire and willingness to pay a price for a specific good or service. Holding all other factors constant, the price of a good or service increases as its demand increases and vice versa. Law of Demand
The lower the price of the product, the greater will be the quantity demanded by all buyers, all other things being equal (Ceteris Paribus). Businesses often spend a considerable amount of money in order to determine the amount of demand that the public has for its products and services. Incorrect estimations will either result in money left on the table if it’s underestimated or losses if it’s overestimated.
The different quantities of a good that producers are willing and able to supply at various prices.
When supply and demand are equal the economy is said to be at equilibrium. At this point, the allocation of goods is at its most efficient because the amount of goods being supplied is exactly the same as the amount of goods being demanded.
If a given amount of money is borrowed for a specified period of time (typically, one year), a certain percentage of the money is charged as interest. This percentage is called the interest rate.
Simple interest is defined as a fixed...