I N T R O D U C T I O N
– Study of how society (individuals, businesses and government) should allocate
scarce productive resources (land, labour, capital and management skills) for the most effi-
cient production of goods and services over time, and distribution, now and in the future, to
the market, among various groups of consumers (adapted from Samuelson).
The figure be-
low illustrates these concepts.
- Management skills
Goods and Services
- Right time and place
- Right clients
- Right quality and quantity
– Study of the economic behaviour of individual decision-making units
(consumers, resource owners and business firms) in a free-market economy.
Issues such as
supply/demand conditions, price/production costs of goods and services, objectives of the
business firm (profit, survival and growth), competitiveness and the theory of production are
– Study of aggregate economic behaviour, i.e. at the national and interna-
Issues such as level and growth of income and consumption, general price le-
vels, investment, wages, interactions between governments, businesses and society, and fis-
cal policies and incentives are studied.
– Study of how businesses raise and allocate capital funds.
Issues such as sources of
funds, capital markets and costs, dividend policies and budgeting are studied.
– Application of scientific principles and technology to the design, implementa-
tion and efficient operation of projects.
– Focuses on cost, benefit, resource allocation and decision-making
aspects associated with engineering projects.
Requires knowledge of engineering design,
economic theory, decision theory, managerial finance, operations research and environmental
Engineering Economic Analysis
– Engineering economic analysis consists of solving prob-
lems associated with project design issues at the development, implementation and operation
phases that are amenable to analytical solutions.
Projects can typically be implemented using