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Lecture-1

The document outlines the Engineering Economics course at Gezira College of Technology, detailing the instructor's qualifications and course objectives, which include understanding engineering economic analysis and decision-making methods. It includes evaluation methods, references, and a brief course outline covering topics such as cost elements, profit-volume ratio, and the law of supply and demand. Additionally, it emphasizes the importance of engineering economy in making strategic decisions within engineering firms.

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Mona Sayed
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6 views

Lecture-1

The document outlines the Engineering Economics course at Gezira College of Technology, detailing the instructor's qualifications and course objectives, which include understanding engineering economic analysis and decision-making methods. It includes evaluation methods, references, and a brief course outline covering topics such as cost elements, profit-volume ratio, and the law of supply and demand. Additionally, it emphasizes the importance of engineering economy in making strategic decisions within engineering firms.

Uploaded by

Mona Sayed
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Gezira College of Technology

Electrical &
Electronic
Engineering Program

Semester ten
Engineering
Economics
Course Instructor: Dr. Amani Ibrahim Alnitaifa

• Scientific Qualifications
• Graduated from the Faculty of Economic
and social studies, University of Khartoum
(1996).
• Master degree in Economy, Sudan
University of science and Technology
(2008).
• PHD, in Economy, Sudan University of
science and Technology (2014).
Course Objectives
At the end of this course, students should be able to:
Understand basic concepts of Engineering economics.
Explain the various aspects of engineering economic
analysis.
help students in carrying out economic analysis and
solving problems.
Understand Annual Equivalent Method.
Understand Value Analysis - Make Or Buy Decision.
Methods of Evaluation

•Assignments.
•Mid Exam .
•Final Exam.
References:
1. Micheal R. Lindeburg - Engineering Economic
Analysis- 2007.
2. R. Panneerselvam- -Professor - Pondicherry
University - Engineering Economics-2012 .
3. - Najib Gerges, Ph.D., P.E.- Continuing
Education and Development - Applied
Engineering Economy.
4. Anthony Tarquin -Engineering Economy-
Texas A & M University-American University
of Sharjah- U. A. E -- 2012.
5. Dr. Jerome Lavelle [email protected];
919-515-3263; 120 Page Hall. Engineering
Economics-
6. Lecture Notes Prepared by the Instructor.
Brief Course Outlines:
 Introduction and overview.
 Elements of Costs- Break-Even Analysis.
 Profit/Volume Ratio.
 Elementary Economic Analysis.
 Interest Formulas and their Applications.
 Bases for Comparison of Alternatives.
 Annual Equivalent Method.
 Methods of Depreciation.
 Inflation Adjusted Decisions.
 Make Or Buy Decision.
 Value Analysis.
Chapter (1): Introduction and overview

Engineering economy deals with the


evaluation of systems, products, and services in
relationship to their costs. Engineering
economy is a field that addresses the
dynamic environment of economic
calculations and principles through the prism of
engineering.
It is a fundamental skill that all successful
engineering firms employ in order to retain
competitive advantage and market share.
Engineering economy studies various financial
and economic problems pervasive to engineers
in a variety of industries. Engineering economy
is a topic that all industry-bound students
should learn because of its real-world
applications.
Engineering economy poses numerous
benefits because it allows those in industry
to make strategic decisions for their
companies.
While macroeconomic and financial
competencies are key for business
operations, engineering economics further
provides a mechanism for decision-making.
It forces engineers to think twice before making
many choices in everyday operations, such as
process configurations, materials, production
size, and other economic factors.
Daily decisions by the engineering firms (based
on an economic framework) will decide how
successful and profitable that company is.
ECONOMICS:
Economics is the science that deals with the production
and consumption of goods and services and the
distribution and rendering of these for human welfare.
The following are the economic goals:
1. A high level of employment.
2. Price stability.
3. Efficiency.
4. An equitable distribution of income.
5. Economic growth.
The flow of goods, services, resources and
money payments in a simple economy are shown
in Fig. 1 Households and Firms are the two major
entities in a simple economy. Firms use various
economic resources like land, labour and capital
which are provided by households.
to produce consumer goods and services which
will be used by them.
Firms make payment of money to the
households for receiving various resources.
The households in turn make payment of
money to Firms for receiving consumer
goods and services.
This cycle shows the interdependence
between the two major entities in a simple
economy.
Figure 1 The circular flow
Revenue Spending
Markets for
G&S Goods &
G&S
sold Services bought

Firms Households

Factors of Labor, land,


production Markets for capital
Factors of
Production
Wages, rent, Income
profit
Firms:
1. Provide goods and services to consumers.
2. Use resources, inputs provided by households.
Households:
1. Consume final goods and services produced by Firms.
2. Provide productive inputs to Firms.
Money payments for resources, rents, wages,
salaries, interest and profit.
Law of Supply and Demand:
An interesting aspect of the economy is that
the demand and supply of a product are
interdependent and they are sensitive with
respect to the price of that product.
Demand Curve
P
A
5
B
4
C

Price ($)
3
D
2 Change in Price =
Movement along
E
1 the Demand

Q
0 10 20 30 40 50
12 Quantity demanded
Factors influencing demand:
The shape of the demand curve is
influenced by the following factors:
•Income of the people.
•Prices of related goods.
•Tastes of consumers.
A Shift in the Demand Curve

Price ($)
Decrease
5 in Demand

3
Increase
in Demand
2

1 D1 D2
D3

0 20 30 40 50 60 70 80 Q
Quantity Demanded
Supply curve
Factors influencing supply:
The shape of the supply curve is affected by
the following factors:
•Cost of the inputs.
•Technology.
•Weather.
•Prices of related goods.
The interrelationships between demand and
supply are shown in Fig. 4
From Fig. 4 it is clear that when there is a decrease in
the price of a product, the demand for the product
increases and its supply decreases. Also, the product
is more in demand and hence the demand of the
product increases.
At the same time, lowering of the price of the
product makes the producers restrain from releasing
more quantities of the product in the market.
Hence, the supply of the product is
decreased. The point of intersection of the
supply curve and the demand curve is known
as the equilibrium point.
At the price corresponding to this point, the
quantity of supply is equal to the quantity of
demand. Hence, this point is called the
equilibrium point.
Concept Of Engineering Economics:
Science is a field of study where the basic
principles of different physical systems are
formulated and tested.
Engineering is the application of science.
It establishes varied application systems based
on different scientific principles.
Questions for Review:
1. Define economics. Also discuss the flow of goods,
services, resources and money payments in a simple
economy with the help of a suitable diagram.
2. Illustrate the effect of price on demand and supply;
illustrate with the help of a diagram.
3. Give the definition and scope of engineering economics.
4. Discuss the factors which influence demand and supply.
5. Define Engineering Economics.
Thank You

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