ECONOMICS APPLIED TO ENGINEERING Ps - Z

The course introduces students to the concept of economic rationality and provides the methodology for the introductory analysis of firms' decisions concerning costs, markets, and project evaluation Students are also introduced to main concepts and models for the analysis of macroeconomic systems.

Upon completion of the course requirements, the student should be able, for each decision with economic consequences, to identify expected costs and benefits. She/he should be able to understand which variables of the macroeconomic context are relevant for business level decisions. Finally, she/he should be able to apply the main evaluation criteria to assess the profitability of an engineering project.

The course is organised as a mixture of theoretical lectures (concerning the principles of Microeconomics, Macroeconomics, and the foundations of project appraisal) and a seriers of tutorials during which exercises on the course topics will be discussed.

Economics of the firm and of markets

How economists think. The logic of costs and benefits. The market. Individual and aggregate demand. Theory of production: the production function and short and long run costs. Market structures: perfect competition, monopoly, imperfect competition. Strategic interaction in oligopolistic markets.

Contemporary economics.

Macroeconomic variables: GDP, price level and inflation, employment and unemployment, balance of payments, public budget, money, financial markets and interest rates. The determination of the national income in the short run. The economic cycle. The AD-AS model. Economic Policy. Principles of open economies.

Project Analysis
Formulating investment alternatives. Project costs. Some representative short-term decisions (make-or-buy, choice of materials). Principles of financial mathematics. Decision Criteria: NPV, IRR, payback, other criteria. Choosing among alternative projects. Capital depreciation. Taxation. Economic evaluation of public sector projects.

O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.

SULLIVAN W.G., WICKS, E.M., LUXHOJ (2006). Economia applicata all’ingegneria. Pearson Prentice-Hall.