ENGINEERING ECONOMICS

ASSIGNMENT # 02
Name: Muhammad Saad Khan
Registration No: 00000245663
Section: BEE-10A

Difference between Engineering Economics and Economics

Economics:
The social science that explains the factors that establish the production, consumption,
distribution and exchange of goods and services. Economics is simply a study about utilizing
scarce resources in the best way possible to get most of the wants. Keeping in mind the
availability of limited resources distributing, exchanging and allocation of these resources to
get the best financial outcome is economics.
There are two types of economics
Microeconomics: It is study of economics at micro level means behavior of firms, households
and individuals in decision making and allocation of resources.
Macroeconomics: It is the study of economics at macro or bigger level discussing economics
at national and governments level.

Engineering Economics:
Engineering Economics is the subset of economics which uses the concepts of cost efficiency,
reliability and productivity in the application and designing of engineering projects. It is the
subject of microeconomics as it majorly covers economics interest of individual, small, scaled
groups of engineering firms.
Everyone wants highest level of quantity in simple words efficiency without compromising
quality same goes for firms dealing with engineering projects. Engineering firms wants to
utilize their limited resources to get the best output and efficiency, but it is the biggest concern
for a firm to get best quantity without compromising quality.
Engineers can use Engineering Economy to consider all aspects of an investment from both a
technical and financial standpoint. Engineering Economy provides several patterns of analysis
to determine rate of return, annual costs, and payout periods, all of which serve as decision-
making bases.