ME0401 - ECONOMICS AND PRINCIPLES OF

MANAGEMENT
PURPOSE
To become familiarized about Engineering Economics and Principles of
Management.

INSTRUCTIONAL OBJECTIVES
The course will enable the students to become familiar with
The different engineering economic principles and strategies
Principles of organizational management
Behaviour of human at organizations with modern management concept

Unit - I ENGINEERING ECONOMICS

1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

INTRODUCTION
INTRODUCTION
ECONOMICS
SCOPE AND DEFINITION
IMPORTANCE OF ECONOMICS IN ENGINEERING
ECONOMIC OPTIMIZATION
DEMAND AND REVENUE ANALYSIS
LAW OF DEMAND
DEMAND FORECASTING
METHODS OF DEMAND FORECASTING
DEMAND CURVES
FACTORS AFFECTING DEMAND
DEMAND ELASTICITY
PRODUCTION ANALYSIS
SIMPLE PROBLEMS

ECONOMICS
economics is the science of choice
Economics is the study of how societies use scarce
resources to produce valuable goods and services and
distribute them among different individuals.
Economics is the study of how people and society choose to employ
scarce resources that could have alternative uses in order to
produce various commodities and to distribute them for consumption,
now or in the future,
from Paul Samuelson and William Nordhaus, Economics, 12th Ed.,
McGrawHill,
New
York, 1985previously known asengineering
Engineering
economics,
economy, is a subset ofeconomicsfor application
toengineeringprojects. Engineersseek solutions to problems,
and theeconomicviability of each potential solution is normally
considered along with the technical aspects.
Functional Activity:- Planning, production material management,
plant engineering, transport, action management etc.
Type of Decision:- Capital budget allocation, make or buy
decisions, replacement, project evaluation etc.

SCOPE AND DEFINITION

Why should I study economics?
Let us count the ways.
Many study economics to help them get a good job.
Some people feel they should understand more deeply what
lies behind reports on infl ation and unemployment.
Or
people want to understand what kinds of policies might slow
global warming
or
what it means to say an iPod is made in China. Why
should I study economics? Let us count the ways.

IMPORTANCE
IN financial
ENGINEERING
Economics
exploresOF
theECONOMICS
behavior of the
markets,
including interest rates, exchange rates, and stock prices.
The subject examines the reasons why some people or
countries have high incomes while others are poor; it goes
on to analyze ways that poverty can be reduced without
harming the economy.
It studies business cyclesthe fluctuations in credit,
unemployment, and inflationalong with policies to
moderate them.
Economics studies international trade and finance and the
impacts of globalization, and it particularly examines the
thorny issues involved in opening up borders to free trade.
It asks how government policies can be used to pursue
important goals such as rapid economic growth, efficient use
of resources, full employment, price stability, and a fair
distribution of income.

ECONOMIC OPTIMIZATION
Economic efficiency requires that an economy
produce the highest combination of quantity and
quality of goods and services given its technology
and scarce resources. An economy is producing effi ciently when no individuals economic welfare can be
improved unless someone else is made worse off.
Economic Optimization
it is the best use of available scarce resources in
such a way that the satisfaction level is
maximum..so we can say minimum usage of
resources and maximum level of output.

Demand: The
willingness
abilityANALYSIS
of buyers to purchase
DEMAND
ANDand
REVENUE
different quantities of
a good at different prices during a specific time period.
Demand Schedule: The numerical tabulation of the quantity
demanded of a good
At different prices; the numerical representation of the law of
demand.
Demand curve: The graphical representation of the demand
schedule.

The price elasticity of demand (sometimes simply called price

elasticity ) measures how much the quantity demanded of a good
changes when its price changes. The precise definition of price
elasticity is the percentage change in quantity demanded divided by
the percentage change in price.

The price elasticities of demand for individual goods are

determined by the economic characteristics of demand. Price
elasticities tend to be higher when the goods are luxuries, when
substitutes are available, and when consumers have more time to
adjust their behavior. By contrast, elasticities are lower for
necessities, for goods with few substitutes, and for the short run.

The market demand curve is the sum of individual demands at each

price.
Figure shows how to add individual dd demand curves horizontally to
get the market DD demand curve.

LAW OF DEMAND
1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

DEMAND FORECASTING
1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

METHODS OF DEMAND FORECASTING

1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

DEMAND CURVES
1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

FACTORS AFFECTING DEMAND

1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

DEMAND ELASTICITY
1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

PRODUCTION ANALYSIS
1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

PRODUCTION ANALYSIS
1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.

SIMPLE PROBLEMS
1. Introduction
2. Economics
3. Scope and Definition
4. Importance of Economics in Engineering
5. Economic optimization
6. Demand and Revenue Analysis
7. Law of Demand
8. Demand Forecasting
9. Methods of Demand Forecasting
10. Demand curves
11. Factors affecting Demand
12. Demand Elasticity
13. Production Analysis
14. Simple problems.