TRIMEX COLLEGES

COLLEGE OF
ENGINEERING

BES211 - Engineering Economics

Assignment No. 1

BSCpE 2018

Name: Bote, Mark Aljun C.

ID No.: 19-A0655

Mr. Dino Alba

Instructor
1. What is Engineering Economics?
 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 given project, estimate its value, and justify it from an
engineering standpoint.
 Engineering economics, previously known as engineering economy, is a subset of
economics concerned with the use and "application of economic principles" in the
analysis of engineering decisions. As a discipline, it is focused on the branch of
economics known as microeconomics in that it studies the behavior of individuals and
firms in making decisions regarding the allocation of limited resources. Thus, it
focuses on the decision making process, its context and environment. It is pragmatic
by nature, integrating economic theory with engineering practice.
 But, it is also a simplified application of micro-economic theory in that it avoids a
number of micro-economic concepts such as price determination, competition and
demand/supply. As a discipline though, it is closely related to others such as Statistics,
Mathematics and Cost Accounting. It draws upon the logical framework of economics
but adds to that the analytical power of mathematics and statistics. What is
Engineering Economy?
2. What is Economy and Economics?
 Economics is an academic discipline and a branch of the social sciences concerned
with observation and analysis of the production, consumption, and transfer of wealth.
Economics utilizes empirical, theoretical, and quantitative methods in order to explain
how scarcity and decision-making impact the way actors in a particular system, be it
individual consumers or entire nations, allocate various forms of wealth and
instruments of wealth-generation, including resources and capital.
 Economy is a term that can characterize a particular system that has applied the
concepts outlined in the study of economics. An economy is the sum of the
overlapping relationships between the producers and consumers of scarce resources
and wealth, and is a byproduct of the various forms of decision-making that an
economic actor partakes in. Economies can vary in size from a local neighborhood
marketplace to the global economy.
3. Importance of Engineering Economics.
 Engineering economy is involved with the formulation, estimation, and evaluation of
economic outcomes when alternatives to accomplished a defined purpose are
available.
 Always concerned with the selection and possible execution of alternatives given the
economic parameters associated with the project.
 Engineering Economy is a set of tools that aid in decision making– but will not make
the decision for you. People make decisions!
 Engineering economy is based mainly on estimates of future events – must deal with
the future and risk and uncertainty.
4. Types of Economics. Give Example.
 Microeconomics focuses on how individual consumers and firm make decisions;
these individuals can be a single person, a household, a business/organization or a
government agency. Analyzing certain aspects of human behavior, microeconomics
tries to explain they respond to changes in price and why they demand what they do
at particular price levels. Microeconomics tries to explain how and why different
goods are valued differently, how individuals make financial decisions, and how
individuals best trade, coordinate and cooperate with one another. Microeconomics'
topics range from the dynamics of supply and demand to the efficiency and costs
associated with producing goods and services; they also include how labor is divided
and allocated, uncertainty, risk, and strategic game theory.
 Macroeconomics studies an overall economy on both a national and international
level. Its focus can include a distinct geographical region, a country, a continent, or
even the whole world. Topics studied include foreign trade, government fiscal and
monetary policy, unemployment rates, the level of inflation and interest rates, the
growth of total production output as reflected by changes in the Gross Domestic
Product (GDP), and business cycles that result in expansions, booms, recessions,
and depressions.