Engineering Economics

1. What is Engineering Economics?

Engineering economics, also known as engineering economy, is a subset of
economics concerned with the use and application of economic principles in the
analysis of engineering decisions. The role of engineering economics is to assess
the appropriateness of a given project, estimate its value, and justify it from an
engineering standpoint. Its objectives are to improve the distribution of wealth.
Circulation of wealth is necessary to reduce the gap between the rich and the
poor community. Circulation and well distribution of wealth also endures that all
the people receive basic necessities of life like medical, educational, security and
more. Also, it is a study of money for public welfare.

2. Why do we study engineering economics? Explain

Economics plays an important part in any business venture, and engineering
while employed to business must constantly keep in mind that what is being
engineered must be sensitive to cost and profitability, or at least to economics of
production or operation. An engineer may wish to study Economics because an
understanding of Economics will allow the engineer to make better, more well-
informed choices in his/her everyday life.