GE 301ENGINEERING ECONOMY The “Money Side” of Engineering 3 lecture units An Introduction by George Y. Chao Jr. Assistant Professor Department of Chemical Engineering University of Santo Tomas It is not something I need to worry about.Engineer X: "Money matters will be handled by someone else." True? ______ False? ______ . Copper 5.Which conductor should be used for electrical cables? Material Electrical Conductivity (S·m-1) Notes Silver 6. Aluminum 3.80 × 107 Gold 4.30 × 107 Best electrical conductor of any known metal Commonly used in electrical wire applications due to very good conductivity and price compared to silver. Generally used for temper and alloy verification of aluminium.52 × 107 Gold is commonly used in electrical contacts because it does not easily corrode.5 × 107 Commonly used for high voltage electricity distribution cables Money also matters for engineers. The unit for expressing the conductivity of nonmagnetic materials by testing using the eddy-current method. Referred to as 100% IACS or International Annealed Copper Standard.69 × 107 Annealed Copper 5. . An engineer routinely face two important questions regarding his design of a process or equipment: Does it work? Is it technically sound? How much does it cost? Is it profitable? Is it economically sound? . 3rd edition Interest and Money-Time Relationships Depreciation Methods for Making Economy Studies Comparing Alternatives .GE 301 ENGINEERING ECONOMY The Monetary Side of Engineering 3 lecture units Textbook: Engineering Economy by Hipolito Sta Maria. (Sullivan 11th edition) .Engineering Economy Definitions • The analysis and evaluation of the factors that will affect the economic success of engineering projects to the end that a recommendation can be made which will ensure the best use of capital. (Sta Maria 3rd edition) • Involves the systematic evaluation of the economic merits of proposed solutions to engineering problems. Resources • • • Land Labor Capital . such as: water. as well as the land itself which is applied to the production process.LAND All gifts of nature. air. plant and tree growth. sunshine. . minerals. and knowledge of people which are applied to the production process. . skills.LABOR The efforts. buildings. machinery -.CAPITAL • Real Capital (Physical Capital ) – Tools.things which Dollar Bills have been produced which are used in further production • Financial Capital – Assets and money which are used in the production process • Human Capital – Education and training applied to labor in the production process . • addressed role of economic analysis in engineering projects. Wellington. civil engineer • latter part of nineteenth century.Origins of Engineering Economy Pioneer: Arthur M. • area of interest: railroad building . factory buildings. buses and farm machinery are examples.CONSUMER GOODS AND PRODUCER GOODS AND SERVICES • Consumer goods and services are those that are directly used by people to satisfy their wants. • Producer goods and services are those used in the production of consumer goods and services: machine tools. . Necessities versus • Products or services that are required to support human life and activities • Purchased in somewhat the same quantity by consumers even if the price varies significantly Luxuries • Products or services that are desired by humans • Purchased only if money is available after the required necessities have been obtained . • Inelastic demand occurs when a decrease in selling price results in a less than proportionate increase in sales. • Elastic demand occurs when a decrease in selling price results in a greater than proportionate increase in sales. .Demand • the quantity of a certain commodity that is bought at a certain price at a given place and time. • Inelastic demand occurs when a decrease in selling price results in a less than proportionate increase in sales.Demand Luxury Demand • Elastic demand occurs when a decrease in selling price results in a greater than proportionate increase in sales. Necessities Price . • the quantity of a certain commodity that is offered for sale at a certain price at a given place and time. .Demand Supply • the quantity of a certain commodity that is bought at a certain price at a given place and time. 2. Explain briefly. . State the law of supply and demand.Engineering Economy Assignment number 1 1. 3. Explain briefly. Differentiate competition. oligopoly. State the law of diminishing returns. and monopoly.