Engineering Economics.December 26, 2020
Engineering economics, previously known as engineering economy, is a subset of economics concerned with the use and “…application of economic principles” in the analysis of engineering decisions. As a discipline, it is focused on the branch of economics known as microeconomics in that it studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources. Thus, it focuses on the decision making process, its context and environment. It is pragmatic by nature, integrating economic theory with engineering practice. But, it is also a simplified application of microeconomic theory in that it avoids a number of microeconomic concepts such as price determination, competition and demand/supply.As a discipline though, it is closely related to others such as statistics, mathematics and cost accounting. It draws upon the logical framework of economics but adds to that the analytical power of mathematics and statistics.
In some U.S. undergraduate civil engineering curricula, engineering economics is a required course. It is a topic on the Fundamentals of Engineering examination, and questions might also be asked on the Principles and Practice of Engineering examination; both are part of the Professional Engineering registration process.
Why Engineers should study economics :
Engineering economics poses numerous benefits because it allows those in industry to make strategic decisions for their companies. While macroeconomic and financial competencies are key for business operations, engineering economics further provides a mechanism for decision-making.
What is engineering economy and its origin :
Engineering economy, the analysis of the economic consequences of engineering decisions, was originated by A. M. Wellington in his The Economic Theory of Railway Location, published in 1887.