APS111H1 Lecture 22: Economics I
30 Oct 2015
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Objectives for today: engineering economics, costs and benefits, profit, break even analysis, payback period. Working for employer/client: influenced by macroeconomics. Relationship of engineering to economics is similar to the relationship of chemical engineering to chemistry. Practical application of economic laws : application. No matter how technically sound an engineering project is, it will fail if it is not economically feasible. The sacrifice usually expressed in dollars involved in performing an activity or taking an action. Cash outlay to purchase materials, labor, energy: benefits. Desirable and measurable outcome that is usually quantifiable in terms of money. Public sector (cost savings, avoid spending money) Not for profit sector (a little of both) Purchasers (recipients) (minimize costs, maximize benefits: users, others. Internal costs versus external costs: internal costs. Included in project or product cost estimate: labor for design and development, facilities and materials for fabrication or construction, regulatory compliance and auditing, external costs. Not typically included in project or product cost estimate.
