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Chapter 1
Introduction
Definition of Economics
Economics is a social science that focuses on the
production, distribution, and consumption of goods and services, and analyzes
the choices that individuals, businesses, governments, and nations make to
allocate resources.
Application/uses of economics in civil Engineering
The principle and methodology of engineering economic has
wide application in mechanical design and general management. Similarly, it is
an integral part of daily management and operation of private companies’
government agencies and non-profit organization. The study of engineering may
assist in decision making in following grounds:
1. Selecting
best alternative design for components of machine, structure, system, product
or service during engineering design.
2. Estimating
and analyzing economic consequences of improvement in factory operation.
3. Selecting
among proposed projects within annual capital budget.
4. Analyzing
whether equipment in service should be replaced or not.
5. Choosing
between asset lease or purchase option.
Principles of Engineering Economy
1. Develop
the Alternatives
1.1 Creativity
and innovation are essential to the process
1.2 The
alternatives need to be identified and then defined for subsequent analysis
1.3 Consider
the status quo, but do not focus on it (i.e., doing nothing)
2. Focus
on the Differences
2.1 Only
the differences among alternatives are relevant to comparison and decision
3. Use
a Consistent Viewpoint (perspective)
4. Use
a Common Unit of Measure
4.1 Use
it for enumerating as many possible outcomes as possible, since it simplifies
the analysis of alternatives
5. Consider
All Relevant Criteria
5.1 Consider
both those that can be measured in monetary terms and “non-monetary” criteria
6. Make
Uncertainty Explicit: Think about the uncertainties that may come in future
7. Revisit
Your Decisions
7.1 Compare
initial projected outcomes with actual results achieved Hence engineering
economics involves technical and economic analysis with decision making
objectives.
Demand and Supply: माग र आपूर्ति
Demand:
Demand is an economic principle referring to a consumer's
desire to purchase goods and services and willingness to pay a price for a
specific good or service.
Law of demand:
Law of demand states that “others things being equal, demand
varies inversely with price.” This law assumes income fashion, rice of related
goods, population size, taste and preferences, price expectations etc. stay
constant.
Elasticity of Demand:
An elastic demand is one in which the change in quantity
demanded due to a change in price is large. An inelastic demand is one in which
the change in quantity demanded due to a change in price is small. If the
formula creates an absolute value greater than 1, the demand is elastic.
What is Supply?
In economics, supply is the amount of a resource that firms,
producers, laborer’s, providers of financial assets, or other economic agents
are willing and able to provide to the marketplace or to an individual. Supply
can be in produced goods, labor time, raw materials, or any other scarce or
valuable object. Supply is often plotted graphically as a supply curve, with
the price per unit on the vertical axis and quantity supplied as a function of
price on the horizontal axis.
Law of Supply:
Marginal utility:
Marginal utility is the added satisfaction a consumer gets
from having one more unit of a good or service. The concept of marginal utility
is used by economists to determine how much of an item consumer are willing to
purchase.
Law of diminishing marginal Utility:
The law of diminishing marginal utility explains that as a
person consumes an item or a product, the satisfaction or utility that they
derive from the product wanes as they consume more and more of that product.
For example, an individual might buy a certain type of chocolate for a while.
Chapter 2
Cost Concept and Fundamental of Cost Accounting
What is Cost?
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