Post on 02-Jun-2018
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In the name of Allah the Most Gracious the Most Merciful
8/10/2019 Engg Eco Lecture
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QUIZ # 2List common characteristics of developing
nations.
List three objectives of economic
development.
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MACROECONOMIC POLICIES
Growth policyInvestment PolicyHuman Resource Development
Trade PolicyExchange Rate PolicyFiscal Policy
Taxation PolicyPublic Expenditure Policy
Monetary PolicyEmployment and Poverty Trends & Policy
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Three Major Sectors of Economy
Agriculture
Manufacturing
Services
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Traditional Measures of Economic
DevelopmentGrowth and Levels of Per Capita Income
Declining share of Agriculture and risingshare of Manufacturing sector
Improvement in Social Indicators such asLiteracy, Schooling, Health Conditions,Services and Provision of Housing
Trickle Down of Growth
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History of Engineering Economics Arthur M. Wellington founder of engineering economics,by profession a civil engineer, wrote a book “ the economictheory of location of railways ” in 1887. His area of interest
was role of railways building in USA
J C.L.Fish and O.B.Goldman both evaluated engineeringstructures from the perspective of actuarial mathematics.
Fish formulated an investment model related to the bondmarketGoldman in his book “Financial Engineering” proposed acompound interest procedure for determiningcomparative values over a period of time
Cont’d
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History of Engineering Economics
Eugene L.grant in 1930 in his book “ principles ofengineering economics ” discussed the importance of
Judgment factors and short term investment evaluationas well as conventional comparisons of long terminvestments in capital goods based on compound interestcalculations Eugene L.Grant could be called as the father ofengineering economics.
Cont’d
8/10/2019 Engg Eco Lecture
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Engineering Economics Engineering economics is the application of economictechniques for the evaluation of design and engineeringalternatives. The role of engineering economics is to:-
assess the appropriateness of a given projectestimate its value
justify it from an engineering point of view
Engineering economy involves technical analysis, withemphasis on the economic aspects and has the objectiveof assisting in decision making
Cont’d
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Engineering Economics Engineering economy involves the systematic evaluation ofthe economic merits of proposed solutions to engineeringproblems. To be economically acceptable, solutions toengineering problems must demonstrate a positive balanceof long term benefits over long term cost and they mustalso:
Promote the wellbeing and survival of an organization
Embed use of creative and innovative technology and ideasPermit identification and scrutiny of their estimated outcomes
Translate profitability to the lowest tier through a valid andacceptable measure of merit
Cont’d
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Engineering Economics The application of economic principles to engineeringproblems, for example in comparing the comparativecosts of two alternative capital projects or indetermining the optimum engineering course from thecost aspect. It means that we need to know about :-
Optimal cost-effectiveness
Alternative possibilities
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Engineering Economics
What we must know?Time value of money
Estimation of cash flows
Quantitative measurements of profitability
Systematic comparison of alternatives
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Assignment 2
Find out share of three major sectors of economy
in the overall economics of at least 15 countries
of the world from various websites. It must
include Pakistan, India, Bangladesh, Sri Lanka,
Korea, USA, UK, Malaysia, China, Australia etc..Provide page reference of website as applicable.
Assignment due on 26 Oct, 2010
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