Notesale: Turn your study into money

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Republic of the Philippines
Marinduque State College
School of Engineering
Engineering Economy Notes

ENGINEERING ECONOMY NOTES
Engineering Economy is one of the most important and useful subjects in the Engineering
curricula, so much so, that is a subject common to all engineering disciplines
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The purpose of this lecture is to
give the student a sound of understanding of the basic concepts of the subject and some insights into
approaches that can be used for making sound economic decisions
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Consumer and Producer Goods and Services
Consumer goods and services are those products or services that are directly used by people to
satisfy their wants
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Necessities and Luxuries
Necessities are those products or services that are required to support human life and activities,
that will be purchased I somewhat the same quantity even though the price varies considerably
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Demand
Demand is the quantity of a certain commodity that is bought at a certain price at a given place
and time
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Inelastic demand occurs when a decrease in the selling price produce a less than proportionate
increase in sales
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Price
Figure 1-1
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Luxuries

Price
Figure 1-2
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Republic of the Philippines
Marinduque State College
School of Engineering
Engineering Economy Notes

Competition, Monopoly and Oligopoly
Perfect competition occurs in a situation where a commodity or service is supplied by a number
of vendors and there is nothing to prevent additional vendors entering the market
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A perfect monopoly exists when a unique
product or service is available from single vendor and that vendor can prevent the entry of all others
into the market
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The law of supply and demand may be stated follows:

Supply

Units

Under conditions of perfect competition, the price at which a given product will be supplied
and purchased is the price that will result in the supply and the demand being equal
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General price – supply relationship

Price

Figure 1-4
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4
3
2
1
0
Engineer Matt
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Performance curve of an electric motor

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Republic of the Philippines
Marinduque State College
School of Engineering
Engineering Economy Notes

The effect of the law of diminishing returns the performance of an electric motor is illustrated
in Figure1
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for the early increase in input, through input of 4
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In this case the fixed
input factor is the electric motor
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