As a discipline, it is focused on the branch of economics known as microeconomics in that it studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources. Thus, it focuses on the decision making process, its context and environment. It engineering economics formulas pdf pragmatic by nature, integrating economic theory with engineering practice. As a discipline though, it is closely related to others such as statistics, mathematics and cost accounting.
It draws upon the logical framework of economics but adds to that the analytical power of mathematics and statistics. Engineers seek solutions to problems, and the economic viability of each potential solution is normally considered along with the technical aspects. Fundamentally, engineering economics involves formulating, estimating, and evaluating the economic outcomes when alternatives to accomplish a defined purpose are available.
Considering the time value of money is central to most engineering economic analyses. Cash flows are discounted using an interest rate, except in the most basic economic studies.