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Economics
What is Economics?
What is Economics?
Economics is a science that deals with the
attainment of the maximum fulfilment of
societys unlimited demands for goods and
services
What is Engineering Economics?
What is Engineering Economics?
Engineering Economics is the branch of
economics that deals with the application
of the laws and theories of economics to
engineering and technical projects
What are Consumer and Producers
Goods and Services?
Consumer goods and services
What are Consumer and Producers
Goods and Services?
Consumer goods and services refer the
products or services that are directly used
by people to satisfy their wants. Examples
are food, clothing, shelter or home, etc.
What are Consumer and Producers
Goods and Services?
Producer goods and services
What are Consumer and Producers
Goods and Services?
Producer goods and services are those that
are used to produce the consumer goods
and services
What is the difference between Necessity
and Luxury?
Necessity
What is the difference between Necessity
and Luxury?
Necessity refers to the goods and services
that are required to support human life,
needs and activities.
What is the difference between Necessity
and Luxury?
Necessity product or staple product
What is the difference between Necessity
and Luxury?
Necessity product or staple product is
defined as any product that has income-
elasticity of demand less than one. This
means that as income rises,
proportionately less income is spent on
such products. Examples include basic
foodstuff like bread and rice, clothing, etc.
What is the difference between Necessity
and Luxury?
Luxuries
What is the difference between Necessity
and Luxury?
Luxuries are those goods and services that
are desired by human and will be acquired
only after all the necessities have been
satisfied.
What is the difference between Necessity
and Luxury?
Luxury product
What is the difference between Necessity
and Luxury?
Luxury product is defined as any product
that has income-elasticity of demand
greater than one. This means that as
income rises, proportionately more income
is spent on such products. Examples
include consumer durables like
appliances, expensive cars, holidays and
entertainment, etc.
What are the different market
situations?
The term market refers to the exchange
mechanism that brings together the sellers
and the buyers of a product, factor of
production or financial security. It may
also refer to the place or area in which
buyers and sellers exchange a well-
defined commodity.
What are the different market
situations?
Buyer or consumer is defined as the basic
consuming or demanding unit of a
commodity. It may be an individual
purchaser of a good or service, a
household (a group of individuals who
make joint purchasing decisions), or a
government.
What are the different market
situations?
Seller is defined as an entity which makes
products, goods or services available to
buyer or consumer in exchange of
monetary consideration.
What are the different market
situations?
Market Situation Sellers Buyers
Source: http://mysite.du.edu/~jcalvert/railway/wellingt.htm
During your first month as an employee at Greenfield Industries (a large drill-bit
manufacturer), you are asked to evaluate alternatives for producing a newly designed
drill bit on a turning machine. Your boss memorandum to you has practically no
information about what the alternatives are and what criteria should be used. The
same task was posed to a previous employee who could not finish the analysis, but
she has given you the following information: An old truing machine valued at
$350,000 exist (in the warehouse) that can be modified for the new drill bit. The in-
house technicians have given an estimate of $40,000 to modify this machine and they
assure you that they will have the machine ready before the projected start date
(although they have not done any modifications of this type). It is hoped that the old
turning machine will be able to meet production requirements at full capacity. An
outside company, McDonald Inc., made the machine 7 years ago and can easily do
the same modifications for $60,000. The cooling system used for this machine is not
environmentally safe and would require some disposal costs. McDonald Inc. has
offered to build a new turning machine with more environmental safeguards and
higher capacity for a price of $450,000. McDonald Inc. has promised this machine
before the start up date and is willing to pay any late costs. Your company has
$100,000set aside for the start-up of the new product line of drill bits. For this
situation,
a. Define the problem
b. List key assumptions.