The University of Lahore

Department of Technology

Course Title: Engineering Economics Course Code: TSS3020

Course Introduction:

This course is designed to introduce the basic concepts of microeconomics. Individual and firm
level analysis will provide the solid base to learn better decision making techniques. This course
will help students to develop mathematical and analytical skills that can be used to solve real time
problems of the present day complex and dynamic firms. It also focuses the issues related to
scarcity, allocation of resources, interaction of market forces, cost of production, and market
structures as core concepts to build up the economic attitude in the students.

Pre Requisites:

● NIL
Recommended Book(s):

● Text: Case Fair (2007) “Principles of Economics” (8th edition) Pearson Prentice Hall, Pearson
Education Inc. and Dorling Kindersley publishing Inc.

● References:
▪ Gregory Mankiw (2004) “Principles of Economics” (4th edition) Dryden Press,
Harcourt Brace College Publishers
● McConnell and Brue, “Economics: Principles, Problems and Policies”
● Ishrat Hussain (2000) “Pakistan: The Economy of an Elitist State”
● Periodicals:
● The Economist,
● Pakistan & Gulf Economist
● Business Week, Dawn (yellow pages)
Course Objectives:

This course aims to provide sound and comprehensive coverage of the concept of economics. More
specifically, this course has the following objectives:

1. Describe and analyze the "economic way of thinking".

2. Describe the methodology used in economics.
3. Identify the conditions that give rise to the economic problem of scarcity.
4. Apply the concept of Opportunity Cost to a Production Possibilities Curve.
5. Describe the behavior of buyers and sellers in a competitive marketplace.
6. List and explain the determinants of Demand and Supply.
7. Explain shifts in the Supply and Demand curves based on changes in Supply and Demand.
8. Student will learn to differentiate between short-run and long-run equilibrium for both a profit-
maximizing firm and for an industry.
9. Students will understand the relationships among price, marginal revenue, average revenue,
marginal cost, average cost and profit.
10. State the Profit-Maximizing principle used to determine how much of a given resource a firm will
use.
11. To use this knowledge in any practical example
12. To learn the professional behavior of the market
13. To utilize the Law of Diminishing marginal rate of substitution, properties of IC, Budget Line,
Consumer equilibrium
14. To know the basic engineering economics rule
15. To obtain cost effective steps using these concepts

Course Outcomes:

Upon the completion of the course, the student should be able to:

1. Become familiar with core microeconomic terms

2. Understand the interaction of demand and supply for efficient allocation of the resources
3. Sort out core economic issues related to the business firms
4. Comprehend the benefits of market efficiency
5. Demonstrate how individuals and firms make decisions and the interactions of those decisions
6. Can use profit maximization principle, for calculating the requirement of given resource usage.
7. Apply microeconomic theories and reflect their implications on real world context
8. Analyze the behavior of domestic firms under different market conditions
9. Have good understanding of relationships among price, marginal revenue, average revenue,
marginal cost, average cost and profit.
10. Can able to differentiate between short-run and long-run equilibrium for both a profit-
maximizing firm and for an industry.
11. Engineers are tasked more and more to place their project ideas within the larger framework of
the environment, where engineers must decide if the benefits of a project exceed its costs, and
must make this comparison in a unified framework.
12. Choosing the best design for a high-efficiency of any designed system.
 13. Engineering activities dealing with elements of the physical environment take place to meet
human needs that arise in an economic setting.
14. The role of engineering economics is to assess the appropriateness of costs (inputs)
and benefits (outputs) resulting from a project investment.
15. It provides formulating, estimating, and evaluating the economic outcomes when alternatives
to accomplish a defined purpose are available.

Week Lecture # Topic Book

1 1 Course Introduction

1 2 Nature of Economics Page 8 to 13

What is economics, Micro and Macro

Economics

1 3 Basic Process of economics, Allocation of Page 8 to 13

resources

2 4 System of Economics Page 8 to 13

The silent features of Capitalisms, socialism,

Mixed Economics,

And Economics system of Islam

2 5 Indifference Curve Analysis Page 43 to 51

Indifference curve, marginal rate of substitution

2 6 Law of Diminishing marginal rate of Page 43 to 51

substitution, properties of IC, Budget Line,

Consumer equilibrium

3 7 Some applications of Indifference curve Page 52 to 61

Price Effect, Income Effect, Substitution Effect,

Inferior goods and

Normal goods

3 8 Theory of Supply Page 62 to70

Laws of supply meaning and measurement of

elasticity, Causes in change
 In supply

3 9 Demand and Elasticity Page 96 to 111

Price determination in market, Law of demand,

causes of change in demand

4 10 Meaning and measurement of Elasticity, Income Page 96 to 111

and cross elasticity

4 11 Numerical revision of all above topics

4 12 Theory of consumer behaviors Page 114 to 125

Utility analysis, basic assumption of margin

Utility

5 13 Law of Diminishing Margin Utility, Law of Equiv. Page 114 to 125

- Marginal Utility

And consumer Equilibrium

5 14 Scale of production Page 143 to155

Economics of large scale, Diseconomies of large

scale, Internal and

External Economics and disadvantages

5 15 Small Scale Production Page 143 to155

Small scale production, advantages and

disadvantages of

small scale production

6 16 Theory of Production Page 143 to155

Concept of Production, Marginal rate of

Technical Substitution,

Optimum combination of resources

6 17 Theory of Cost Page 165 to 180

Cost of production, meaning of short run and

long run, Short run and
 Long run cost Curve

6 18 Market and Perfect Competition Page 251 to 265

Meaning of market, Perfect Competition,

Equilibrium of a firm

Under P.C

7 19 Monopoly Page 270 to 280

What is monopoly, short run and long run

Equilibrium under Monopoly

7 20 Price Discrimination Page 280 to 285

Nature of price discrimination, condition of P.C

dumping

8 23 MIDTERM

8 24 MIDTERM

9 25 Imperfect Combination Page 301to 324

What is imperfect combination, Price and

output under

imperfect combination

9 26 Mathematical Economics

Introduction of mathematical Technique,

Variable, Constant,

Parameters, Linear and non linear Equation

10 27 Derivation

Meaning of derivation, Role of derivation, MPC, Page 165-180

MPS, MR,

MC, AC, AR, TR

10 28 Difference between micro- & macro- Economics Page 399-406

and their relative use in business
11 29 National income Page 417-430

Introduction of N. I

11 30 Concept of GDP, NNP, GNP, NI, PI, DI Page 417-430

12 31 Consumption Function Page 417-430

Meaning of consumption, relation b/w

consumption and income

12 32 Factor Effect of consumption

12 33 Aggregate Expenditure and Equilibrium Output Page 455-470

12 34 Fiscal Policy, Introduction, Objective F. P Page 479-495

12 35 Role of F.P in N.I, Determination Page 479-495

13 36 Concept of Money Page 501-520

Characteristics of good money, History and

stages in development of money,

Functions of money

13 37 Monitory Policy Page 525-539

Introduction, Objective, tools of M.P, role of

monitory policy

13 38 Commercial Bank Page 721-730

Concept of C.B, functions, credit creation by all

the commercial bank

13 39 Central Bank Page 721-730

Functions and role of central bank, Interest free

banking in Islam

14 40 Capital Budgeting and Risk Measurement Handouts

14 41 Capital Budgeting and Risk Measurement Handouts

14 42 International Trade Page 747-756

International Trade and production, TOT, BOP

15 43 Economic Development Page 765-770

Concept and measurement of Economic

development

15 44 Under develop countries Page 771-776

Characteristics of UDC, problems facing by

Pakistan in developing progress

15 45 Agricultural and Industrial Development in Handouts

Pakistan

16 46 Introduction, Importance, Problem face in Handouts

Agricultural and Industry and as well as their
remedy

16 47 Problems

16 48 Revision