Prepared by: Syed Saad Ahmed
Definition of Economics:
Economics is the branch of science which deals with the system of production andmanagement of material wealth, aspect of social, political and economical life. Itconcerned with worldly necessities of life, using the minimum of time or resourcesnecessary for effectiveness.
Engineering economics is the branch of science which deals with the concepts andtechniques of analysis useful in evaluating the worth of systems, products, andservices in relation to their costs.
Engineering economics is the application of economic techniques to the evaluation of design and engineering alternatives.The role of engineering economics is to assess the appropriateness of a givenproject, estimate its value, and justify it from an engineering standpoint.
It is used to answer many different questions:
hich engineering projects are worthwhile?
as the mining or petroleum engineer shown that the mineral or oildeposits is worth developing?
hich engineering projects should have a higher priority?
as the industrial engineer shown which factory improvementprojects should be funded with the available dollars?
ow should the engineering project be designed?
as chemical or process engineer chosen the best thickness forinsulation?
wo Factors in Engineering Economic Decisions
The factors of time and uncertainty are the defining aspects of any engineering economic decisions