NED UNIVERSITY OF ENGINEERING &

TECHNOLOGY KARACHI
DEPARTMENT OF HUMANITIES & MANAGEMENT
Course Instructor: Mr. Raza Ali Khan
Associate Professor
General Information
Course Title
Code
Year
Teaching Hours
Prerequisite
Marks Distribution

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Engineering Economics
HS303
Third Year
60 hours/year
None
80 final exam
20 sectional assignments

Objectives
1.

To give students a sound understanding of the basic economic aspects of engineering decisions.

2.

Some insight into approaches that can be used for making sound economic decisions concerning
the types of problems, which they are likely to encounter in other engineering courses and in their
careers.

3.

At the same time they should acquire a solid base for further study, which will permit them to
understand & use more advanced & constantly developing procedures helpful in analyzing more
complex economic problems, that they may encounter in their later careers.

4.

This course enhances the ability of evaluation, helps them to make decision amongst alternatives
available.

Contents
1.

Introduction: Basic concepts and principles of economics, micro-economics theory, the problems
of scarcity, basic concepts of engineering economy.

2.

Economic Environment: Consumer and producer goods, goods and services, demand & supply
concept. Equilibrium, elasticity of demand, elasticity of supply, measures of economic worth,
price-supply-demand-relationship, theory of production, factors of production, laws of returns,
break-even charts and relationships, perfect competition, monopoly, monopolistic competition and
oligopoly.

3.

Elementary Financial Analysis: Basic accounting equation, development and interpretation of

financial statements income statement, balance sheet and cash flow, working capital
management.

4.

Break Even Analysis: Revenue / cost terminologies, behaviour of costs, determination of costs
and revenues, numerical and graphical presentations, practical applications, BEA as a management
tool for achieving financial / operational efficiency.

5.

Depreciation and Taxes: Depreciation concept, economic life, methods of depreciations, profit
and returns on capital, productivity of capital, gain (loss) on the disposal of an asset, depreciation
as a tax shield.

NED UNIVERSITY OF ENGINEERING &

TECHNOLOGY KARACHI
DEPARTMENT OF HUMANITIES & MANAGEMENT
6.

Business Organization: Type of ownership, single ownership, partnerships, corporation, type of

stocks and joint stock companies; banking and specialized credit institutions.

7.

Capital Financing & Allocation: Capital Budgeting, allocation of capital among independent
projects, financing with debt capital, financing with equity capital, trading on equity, financial
leveraging.

8.

Selection Between Alternatives: Time value of money and financial internal rate of return,
present value, future value and annuities, cost-benefit analysis, selection amongst materials,
techniques, designs etc; investment philosophy, investment alternatives having identical lives,
alternatives having different lives, make or buy decisions and replacement decisions.

9.

Value Analysis / Value Engineering: Value analysis procedures, value engineering procedures,
value analysis versus value engineering, advantages and applications in different areas, value
analysis in designing and purchasing.

10. Linear Programming: Mathematical statement of liner programming problems, graphic solution
Simplex procedure, Duality problem.
Teaching Methodology
Lectures, presentations, group discussions and progressive evaluation.
Recommended Text Books
Engineering Economy
Engineering Economy
Economics

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by A. Tarquin
by Degarmo
by Samaulson

Reference Books/Magazines/Articles
Mathematical Economics :
by Chiange, Nickolson.
Pakistan Gulf Economist, Business Recorder.