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Rajesh Kalli: Engineering Economics
Rajesh Kalli: Engineering Economics
HU 300
Rajesh Kalli
Course Contents
Chapter I Basic Economic Concepts
Chapter II Methods of Economic Analysis in Engineering
Chapter III Evaluating Replacement Alternatives
Chapter IV Depreciation Accounting
Chapter V Estimating Economic Elements
References
1. Thuesen G. J. and Fabrycky W. J. Engineering Economy
2. Sullivan W. G. Bontadelli J. A and Wicks E. M. Engineering Economy
3. Leland Blank P. E and Anthony Tarquin P.E., Engineering Economy
4. Newnan Donald G. Eschenbach Ted G. Lavelle Jerome Engineering Economic
Analysis
5. Gregory Mankiw, Principles of Economics, Thomson 2002.
Sl No. Weightage for Assessments %
1. Mid Semester 25%
2. Continuous Assessment 25%
3. End Semester 50%
Need? Want.?
Needs vs. Wants
You make an economic choice when you only have money for certain
items, not all.
Example:
I do not have enough money for both popcorn and a Pepsi. I must choose, so I buy
the popcorn. That is my economic choice.
Opportunity Cost
an
opportunity cost represents an alternative given up when a decision is made.
When
the best alternative is chosen from a range of alternatives the second best
choice is known as opportunity cost.
Opportunity
cost differs from people to people.
Supply and Demand
satisfaction
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Eff
ort
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Introduction
Economic science is primarily concerned with the processes of
mobilizing, allocating, and utilising resources for the purpose of
promoting human development and welfare.
Economics as a branch of knowledge is concerned with the study of the
allocation of scarce resources among competing ends.
Problems of resource allocation are constantly faced by individuals,
enterprises and nations.
Introduction
The necessity for economizing arises from the fact that we have limited
productive resources such as land, raw materials, skilled manpower, capital
equipments, and technology at our disposal.
Because these resources are found in limited quantity, the goods they can
produce are also limited.
Therefore, resources need to be used and managed most efficiently and
economically.
Efficient and economic use of resources is not an easy task. It is achieved over
time, and is a function of many physical, financial, engineering, human and
institutional factors.
Introduction
What to Produce?
How to Produce?
For Whom to Produce?
These questions need to be asked because resources are scarce and can be put
to alternative uses
Cont
1. Wealth Definition Adam Smith (1723 1790) in his book An Inquiry into
Nature and Causes of Wealth of Nation defined economics as the science of
wealth promote the societys interests
3. Growth Definition Prof Samuelson the study of how men and society
choose with or without the use of money.
Economics
Economic Problems
Scarcity of Resources
Cont
Scarcity Definition (1932) Lionel Robbins An Essay on the nature and significance of
economic science - Economics is a science in which studies human behavior as a
relationship between means and ends which have alternative uses.
resources that we consider infinitely abundant, and which are free in
dollar terms, are scarce in some sense
Scarcity
Production
Possibilities Choice
Frontiers (PPF)
Economics Efficiency
Branches of Economics
Micro Macro
Economics Economics
National Income
Firm Aggregate Consumption
Consumers Savings and Investment
Individual Inflation and Deflation
Industry Employment and Unemployment
General Price Level
Aggregate export and import
Micro Economics
C2
C3
R1 R2 R3