Engineering Economy

Topics: Supply and demand, Price elasticity of demand, Economics Pages: 11 (810 words) Published: January 26, 2014
GE 301
Engineering economy

AN INTRODUCTION

ECONOMICS
 Definition



It is one of the social sciences, which
consists of that body of knowledge
dealing with people and their
assets or resources.

ECONOMICS
Resource (Definition)




It is a material or asset that is transformed to
produce benefit, and in the process may be
consumed or made unavailable.

Asset (Definition)






It is anything tangible or intangible that is capable of
being owned or controlled to produce value.
It is anything that represents value of ownership that
can be converted into cash.

ECONOMICS
 Definition



It is a social science that analyzes
the production, distribution and
consumption
of
goods
and
services.

ENGINEERING ECONOMY

 Definition



It is defined as that branch of
Economics which involves the
applications of the laws of
Economics,
theories
of
investment,
and
business
practices
to
engineering
problems involving cost.

ENGINEERING ECONOMY

 Definition



It may also be considered as a
study of economic theories and
their applications to engineering
problems with the concept of
obtaining maximum benefit at
the least cost.

ENGINEERING ECONOMY

 Definition



It involves the study of cost
features and other financial data
and their applications in the field
of engineering as a basis for
decision.

ENGINEERING ECONOMY

 Definition



It is the analysis and evaluation of
the factors that will affect the
economic
success
of
engineering projects to the end
that a recommendation can be
made which will insure the best
use of capital.

Uses of Engineering Economy

Seeking new objectives for the
applications of engineering
 Discovery of factors limiting the
success of a venture or enterprise
 Comparison of alternatives as a
basis for decision
 Analysis of possible investments of
capital
 Determination of bases for decision


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Terms and Principles of Economics

Goods

Consum
er
Goods

Produce
r Goods

Terms and Principles of Economics
 Consumer


Goods (Definition)

These are goods that are consumed or
are used directly by people, or are
things and services which serve to
satisfy human needs.

Terms and Principles of Economics
 Producer


Goods (Definition)

Producer
goods
are
those
that
produce goods and services for
human consumption, such as electric
motors, generators, tools, concrete
mixers, buses, airplanes and ships,
among others.

Terms and Principles of Economics

 Necessities



(Definition)

These are products or services
that are required to support
human life and activities, that will
be purchased in somewhat the same
quantity even though the price
varies considerably.

Terms and Principles of Economics

 Luxuries



(Definition)

These are products or services
that are desired by humans and
will be purchased if money is
available after the required
necessities have been obtained.

Terms and Principles of Economics

 Demand



(Definition)

It is the quantity of a certain
commodity that is bought at a
certain price at a given place and
time.

Terms and Principles of Economics

 Supply



(Definition)

It is the quantity of a certain
commodity that is offered for
sale at a certain price at a given
place and time.

Elasticity of Demand


Elastic Demand


It occurs when a decrease in selling price
will cause a greater than proportionate
increase in the volume of sales.



Goods which are considered luxuries is said
to have elastic demand because a small
decrease in cost will usually result in big
increase in sales.

Elasticity of Demand


Inelastic Demand


It occurs when a decrease in selling price
will cause a less than proportionate
increase in the volume of sales.



Goods which are...
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