engineering economics lectures

1. ECONOMICS
Lecture 01
ENGINEERING ECONOMICS
DEPARTMENT OF ENGINEERING MANAGEMENT
COLLEGE OF E&ME, NUST

2. ECONOMICS ?

3. What is Economics?
• The Study of how limited resources is used
to satisfy unlimited human wants.
• The study of how individuals and societies
choose to use scarce resources that nature
and previous generations have provided.

4. ECONOMICS
• Exchange
To trade one thing for another.
Example: I want to trade in
my green disk for a blue
one.
• Barter
The exchange of goods or
service without money.
Example: I’ll give you my cake
for your ice cream.

5. Three Kinds of
Money
Cash Checks Credit Cards

6. Needs vs. Wants
• Needs – what people
must have to live.
Food
Clothing
Shelter
• Wants – the things we
would like to have,
but can live without.

7. Economic Choice
You make an economic choice when you only
have money for certain items, not all.
Example:
I do not have enough money for both popcorn and a pizza. I must choose, so
I buy the popcorn. That is my economic choice.
YUM!

8. Opportunity Cost
Opportunity cost what you must give
up when you make an economic
choice.
Example:
I chose the popcorn, so I have to give
up the pizza. That is my opportunity
cost.

9. Supply and Demand
• Supply is the amount
of a good or service
available.
• Demand is what
people are willing and
able to buy.
I would like to buy one candy cane, please.

10. What can I do with my money?
• Spend it
• Save it
• Invest it
– Give people money to use to make more moneys, like in stocks and bonds.

11. Goods and Services
• Goods • Services

12. Three types of resources work together in our economy
Human Resources
Capital Resources
Natural Resources

13. Natural Resources are things we get from nature.
Oil Coal Trees Water

14. Human resources are jobs done by humans at
work.

15. Capital resources are the machines, tools and
buildings needed to do a job.

16. DISCUSSION