Engineering Economics

Assignment No 1
Name: Muhammad Moazam
Class: BEE 13 B
Reg No: 369381

Economics vs Engineering Economics

Economics:
Defination:
Economics can be defined as the social science that tells about the production, distribution,
exchange and consumption of goods and services. Further it deals with the behavior and decision
making of individuals, businesses and governments and how they allocate resources to satisfy
their wants and needs.
Goal:
The ultimate goal of the economics is to improve the living standards by understanding how to
produce and distribute goods and services in the an efficient and sustainable way.
Key Areas:
Following are the two main branches of the economics.
1-Microeconomics
2-Macroeconomics
Microeconomics deals with the behavior and decision making of the individual consumers and
the firms.
Macroeconomics deals with the overall performance of the economy including gross domestic
product (GDP), inflation and unemployment.

Engineering Economics:
Defination:
Engineering Economics is the branch of economics that specifically deals with the the economic
analysis of engineering projects. It applies the principles of economics to evaluate the feasibility,
cost effectiveness, and potential returns of engineering projects.

Focus:
The focus of engineering economics is to determine the value of an investment, taking into
account not only the initial cost of the projects but also the cost and benefits that will occur
over time.
Importance:
By using engineering economics, engineers can make informed decisions about how to proceed
with a project and how to manage and optimize the resources required to ensure its success. It
will helps to ensure that engineering projects should be cost effective and will meet the needs
and expectations of the stake holders.