are those products or services that are required to support human life and activities, that will be purchased in somewhat the same quantity even though the price varies considerably.

occurs in a situation where a community or service is supplied by a number of vendors and there is nothing to prevent additional vendors entering the market.

represents money which has been spent or capital which has been invested and which cannot be recovered due to certain reasons.

“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.”

Any increased economic activity must be justified based on the following fundamental economic principle: marginal revenue must exceed marginal cost. Here, the marginal revenue is the additional revenue made possible by increasing the activity by one unit (or a small unit). Similarly, marginal cost is the additional cost incurred by the same increase in activity. Productive resources such as natural resources, human resources, and capital goods available to make goods and services are limited. Therefore, people cannot have all the goods and services they want; as a result. they must choose those things that produce the most.

are those products or services that are directly used by people to satisfy their wants.

occurs when a decrease in selling price result in a greater than proportionate increase in sales.

When revenues and other economic benefits are present and vary among alternatives, choose the alternative that maximizes overall profitability based on the number of defect-free units of a product or service produced.

is the opposite of perfect competition. A perfect monopoly exists when a unique product or service is available from a single vendor and that vendor can prevent the entry of all others into the market.

occurs when a decrease int the selling price produces a less than proportionate increase in sales.

In practice, if an alternative (X) is selected from a set of competing alternatives (X,Y), then the corresponding investment in the selected alternative is not available for any other purpose. If the same money is invested in some other alternative (Y), it may fetch some return. Since the money is invested in the selected alternative (X), one has to forego the return from the other alternative (Y). The amount that is foregone by not investing in the other alternative (Y) is known as the opportunity cost of the selected alternative (X). So, the opportunity cost of an alternative is the return that will be foregone by not investing the same money in another alternative.

Engineers are called upon to participate in a variety of decision-making processes, ranging from manufacturing and marketing to financing decisions. We will restrict our focus, however, to various economic decisions related to engineering projects.

Consider the costs of acquiring tools and equipment and the costs of maintaining them.

are those which remain relatively constant regardless of any change made in operations or policy. Thus, the rental of a property may remain unchanged even if the output of a factory changes a great deal.

Costs relevant to selecting sites must be carefully considered (land cost, construction cost, cost of available labor, cost of transporting equipment and materials)

refers to any increase in cost; the word increment meaning increase.

is the analysis and evaluation of the factors that will affect the economic success or engineerna projects To The end That recommendation can be made which will insure the best use of capital Sta. Maria.

are those products or services that are desired by humans and will be purchased if money is available after the required necessities have been obtained.

An economic decision should be based on the differences among alternatives considered. All that is common is irrelevant to the decision. Certainly, any economic decision is no better than the alternatives being considered. Therefore, an economic decision should be based on the objective of making the best use of limited resources. Whenever a choice is made, something is given up. The opportunity cost of a choice is the value of the best alternative given up.

are those which vary with output or any change in the activities of an enterprise. For example, the cost of materials used depends on the output.

Involves selection among materials available that result in the most economical product and give the best results.

When revenues and other economic benefits are NOT present or are constant among all alternatives, consider only the costs and select the alternative that minimizes total costs per defect-free unit of product or service output.

is one of the social sciences which consists of that body of knowledge dealing with people and their assets or resources. Economics has also been defined as the sum total of knowledge which treats of the creation and utilization of goods and services for the satisfaction of human wants.

Two or more different methods may give the same satisfactory results. Select the most economical way to accomplish operations.

is the additional cost of producing one more unit of a product. Thus, marginal cost may also be considered as increment cost for an additional unit.

exists when there are so few suppliers of a product or service that action by one will almost inevitably result in a similar action by the others.

occurs when the mathematical product of volume and price is constant.

“When the use of one of the factors of production is limited, either in increasing cost or by absolute quantity, a point will be reached beyond which an increase in the variable factors will result in a less than proportionate increase in output”.

For delaying consumption, investors demand a minimum return that must be greater than the anticipated rate of inflation or any perceived risk. If they didn't receive enough to compensate for anticipated inflation and perceived investment risk, investors would purchase whatever goods they desired ahead of time or invest in assets that would provide a sufficient return to compensate for any loss from inflation or potential risk.

involves formulating, estimating, and evaluating the expected economic outcomes of alternatives designed to accomplish a defined purpose. Mathematical techniques simplify the economic evaluation of alternatives (Blank and Tarquin, 2005).

A fundamental concept in engineering economics is that money has a time value associated with it. Because we can earn interest on money received today, it is better to receive money earlier than later. This concept will be the basic foundation for all engineering project evaluation.

Bear in mind that workers have varying efficiency and proficiency. Worker proficiency can be translated into monetary values.

includes all the initial expenses for starting any enterprise. In general, this will be the sum of the promotion and development costs.

has been defined by different authors in different senses. those costs “which arise as the result of a change in operations or policy”, while Thuesen defines the term as “the ratio of a small increment of cost and a small increment of output”. Thus, in the sense taken by De Garmo, this may also be considered as synonymous with increment cost.

is the quantity of a certain commodity that is bought at a certain price at a given place and time.

The design to be selected must be best suited for the work to be done with particular care being given to the one which will do the work with utmost economy.

are used to produce consumer goods and services or other producer goods.

Only a certain number of personnel will lead to the highest productivity; increasing this number will not cause a proportional increase in productivity.

is the quantity of a certain commodity that is offered for sale at a certain price at a given place and time.