Kamla Nehru Institute of Technology, Sultanpur
Engineering & Managerial Economics
Professor: Respectfully Mr. Pradeep Kumar Sir, MBA, M.Phil
Assignment submission by
Akshay Kumar Rahul
Roll NO: 16503
Mechanical Engineering
Semester 5​th
​
2018-2019
ASSIGNMENT
OF
ENGINEERING & MANAGERIAL ECONOMICS (B.Tech. Sem. V)
​UNIT 1
1. Explain the definition of economics​​.
Answer-:​​ ​ The term economics has its root from the Greek word ​Oikonomia .​
Adam Smith called Fathr of e]\Economics proposed economics as
All money is a matter of belief.
For the definition many contributors form the basis of the definition as Economics is a science which studies human behaviour as a relationship between
ends and scarce means which have alternative uses.
Economics is the science of analyzing the production,
distribution, and consumption of goods and services. In other words, what choices
people make and how and why they make them when making purchases.
Economic analysis often progresses through
deductive processes, much like mathematical logic, where the implications of
specific human activities are considered in a "means-ends" framework.
Various contributors to the definition are● James Steuart
● Adam Smith
● J.B. Say
● William Stanley Jevons
● Alfred Marshall
● Lionel Robbins
2. Is economics science or art? Give your views and reasons for it.
Answer-​​ Economics is a science (whether positive or normative) in its
methodology and an art in its application, because it has theoretical as well as
practical aspects.Economics is both science and art.
#​Economics is a sciece because:
Many laws of economics are based on assumption a person choses the best
available option this hints towards economics being art.
Economics has laws like science e.g., law of demand : As price increase demand
decreases.
It reflects human buying behavior.
Science is a study based on observation and experiment.
As science economics answers questions related to micro or macro economic units
based on data and economics laws.
Which crop a farmer should produce economics answers. How to increase crop
produce other science answers.
.
#​Economics is an art because​:
Art means physical & mental ability by which an activity may be performed in a
best way so economics is an art because formation of economics policy is a
measure function of art.
Economists suggest policies along with their application and procedures to solve
the economic problem.
3. Explain the nature of economics as a positive science and normative science.
Answer: ​In 1906, Irving Fisher argued that economics is no less scientific than
physics or biology.
​Economics does have both theories and facts.
When supply greatly exceeds demand, prices usually drop. When taxes become
crushing, personal incentive declines. When interest rates drop, home sales
increase and retiree's income drops.
It's wrong to think of it as not a serious field of study because it doesn't produce
exact results in every situation​.
#Economics is a positive science because​:
• Firstly, economists collect the facts.
• Secondly, they analyze them and derive result.
• Thirdly, they determine the relationship between facts and results.
• Finally, they give a title to the bosomed relationship
#​Economics is normative science because​:
• Economists points out different economic problems.
• They analyse them in the light of statistics or facts and figures.
• Finally, they advise policies, laws, theories to solve the problems
4. Differentiate between micro- economics and macro-economics.
Answer:
The main differences are:
#DefinitionMacroeconomics is a branch of economics dealing with the performance, structure,
behavior, and decision-making of an economy as a whole.
Microeconomics is the branch of economy which is concerned with the behavior of
individual entities such as market, firms and households.
#FoundationThe foundation of macroeconomics is microeconomics.
Microeconomics consists of individual entities.
#ideologyOutput and income, unemployment, inflation and deflation.
Preference relations, supply and demand, opportunity cost.
#ApplicationsUsed to determine an economy's overall health, standard of living, and needs for
improvement.
Used to determine methods of improvement for individual business entities.
#Time NatureMicroeconomics is a static analysis. It does not take into account the time element.
macroeconomics is a dynamic analysis. It is based on time-lags, the rates of change
and past and expected values of the variables.
5. Define managerial economics and discuss its scope.
Answer:
Managerial Economics​ ​is concerned with the economic decisions
of business managers. It is a branch of Economics which uses microeconomic
analysis to specific business decisions (i.e. Economics applied in business
decision-making).
Managerial Economics may be viewed as Economics applied to problem solving
at the level of the firm, company, organisation
. The problems of course relate to choices and allocation of resources, which are
basically economic in nature and are faced by managers all the time.
It is that branch of Economics, which serves as a link between abstract theory and
managerial practice
Example:
In the movie “​Batman Begins​​”, the hierarchical owner ​BRUCE WAYNE o​ f
Wayne Enterprises, was abandoned due personal reasons.
After learning management and martial arts.
He decided to fight against the corruption ridden ​Gotham ​City despite of
having no friend and supporters.
He has having very decent resources and ideas and a few believable people.
But he manages to all level of superiority and good beliefs and in the end he wins
making Gotham a happy place.
#​​Scope of Mangerial economics:
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Theory of demand
Theory of productiok
Theory of exchange or price
Theory of profit
Theory of capital and investment
● Demand analysis and forecasting​ : A firm's performance and profitability
depends upon accurate estimates of demand. The firm will prepare its
production schedule on the basis of demand forecast. Demand analysis helps
to identify the factors influencing the demand for a firm's product and thus
helps a manager in business planning.
● Cost and production analysis​:
.
● Recognizing the factors, which are causing cost to firm.
● Suggests cost should be reduced for making good profits.
● Production analysis deals with, Minimum cost should be spend on raw materials
and maximum production should be obtained
● Pricing decisions, policies and practices:​ The topics covered under this area
are: price determination in various market forms such as perfect market,
monopoly, oligopoly, etc., pricing methods such as differential pricing and
product-line pricing, and price forecasting.
● Profit management l​ ike nature and measurement of profit, profit policies,
and techniques of profit planning
● Capital Management
● Competition
6. “Managerial economics is applied micro economics”. Elucidate.
Answer:
Since managerial economics is basically concerned with economic
decision making within the firm, it is more close to microeconomics than to
macroeconomics. Some writers have ventured to call it applied microeconomics or
price theory in the service of business executives.
Managerial economics is slightly broader than microeconomic theory. It also
necessitates the ap​plication and integration of practices, principles, and techniques
from the areas of accounting, fi​nance, marketing, production, personnel, and other
functions or disciplines associated with economics.
Because the survival, growth and prosperity of the firm are often linked to what is
happening to the gross national product, the gener​al level of employment, and the
general price lev​el, there is a need to relate the economics of the firm with the
economic system.
7. What do you understand by the term engineering and how it is dependent
on managerial economics to achieve objectives?
Answer:
Engineering: Engineering is a scientific field and job that involves taking our
scientific understanding, concepts of the natural world and using it to invent,
design, and build things to solve problems and achieve practical goals for the
betterment of humans and surroundings.
It helps in the following domains or objectives of managerial economics:
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Value Analysis
Linear Programming
Critical Path Economy
Interest and Money - Time Relationships
Depreciation and Valuation
Capital Budgeting
Risk, Uncertainty, and Sensitivity Analysis
Fixed, Incremental, and Sunk Costs
Replacement Studies
Minimum Cost Formulas
Various Economic Studies in relation to both Public and Private Ventures
It has wide scope in manufacturing, construction, mining and other engineering
industries. Examples of economic application are as follows: – Selection of
location and site for a new plant. – Production planning and control. – Selection of
equipment and their replacement analysis. – Selection of a material handling
system. Better decision making on the part of engineers.
Managerial economics is profounded in the engineering economics as folows:
1. Engineering is closely aligned with Conventional Micro-Economics.
2. Engineering is devoted to the problem solving and decision making at the
operations level.
3. Engineering can lead to sub-optimisation of conditions in which a solution
satisfies tactical objectives at the expense of strategic effectiveness.
4. Engineering is useful to identify alternative uses of limited resources and to
select the preferred course of action.
5. Engineering Economics is pragmatic in nature. It removes complicated abstract
issues of economic theory.
6. Engineering Economics mainly uses the body of economic concepts and
principles.
7. Engineering Economics integrates economic theory with engineering practice.