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Text 1 Introduction
Text 2 Economics
Text 3 Engineering Economics
Text 4 Construction Manager
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1. : 1) Personal Information and Your Speciality.
2) The Main Economical Terminology.
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E C O N O M I C S
Lead - in
Economics is exciting and important. Anyone who thinks otherwise has failed to realize that economic ideas and practices have moved people to rebellion, and nations to war. Many of the great issues that confront us today among them unemployment, inflation, ecological decay have economic roots. In order to diagnose and remedy these ailments, we must first understand their complex nature.
Milton H. Spencer
1. Do you share the opinion that economics is exciting and important? Give your reasons.
2. How can economics help understand the nature of such ailments as unemployment, inflation, etc.?
3. List the main economic problems affecting the world today. How can the
knowledge of economics help solve them?
4. Why are Rembrandts expensive while water is cheap especially since everyone needs water more than Rembrandts?
5. Why are some luxury apartments vacant while there is shortage of low-cost housing?
6. Why do the prices of some commodities fluctuate while the prices of others remain stable?
Text 1
Read the text. Be ready to answer the following questions: 1. Why is it important to learn economic terminology? 2. What is an economic institution? 3. How can cultural norms affect economies? 4. What is meant by economic reasoning?
Introduction
Economists have developed the terminology to describe economic issues. This terminology is important because if you are going to talk about the state of the economy, you need the terminology to do it. Shareholder, GDP, GNP, capital, supply and demand, costs, benefits, exchange rate are just a few of the terms the meaning of which any educated person in modern society needs to know. Two terms to be introduced to you immediately are the economy and economics. The economy is the institutional structure through which individuals in a society coordinate their diverse wants or desires. Economics is the study of the economy. That is, economics is the study of how human beings in a society coordinatetheir wants and desires.
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An economic institution is a physical or mental structure that significantly influences economic decisions. Corporations, governments, and cultural norms are all economic institutions. Many economic institutions have social, political, and religious dimensions. For example, your job often influences your social standing. In addition, many social institutions, such as family, have economic functions. If any institution significantly affects economic decisions, it can be considered as an economic institution. Even cultural normscan affect economies. A cultural norm is a standard people use when they determine whether a particular activity or behaviour is acceptable.
Learning economic reasoning means learning how to think as an economist. People trained in economics think in a certain way. They analyze everything critically. Having put their emotions aside, they compare the costs and the benefits of every issue and make decisions based on those costs and benefits.
Text 2
Read the text. Be ready to answer the questions below it and explain the key terms of the text given both in bold and italics.
Economics
Understanding how various economies work is the basic purpose of studying economics. We seek to know how an economy is organized, how it behaves, and how successfully it achieves its basic objectives.
Economics is concerned with production, distribution, and consumption of goods and services. There are two branches of economics. Macroeconomics (macro derives from the Greek word for large) investigates how scarce resources are allocated within the economy as a whole or within an entire industry. Scarcity occurs because human wants exceed the production possible with our limited time and resources. Scarcity implies that every decision involves opportunity costs. Opportunity costs exist in all situations where available resources are not abundant enough to satisfy all our desires. You can select only a few of all available alternatives. For example, a little boy goes into a toy store with $10. Many different toys tempt him, but he finally narrows his choice to a Monopoly game and a magic set, each costing $10. If he decides to buy the Monopoly game, the opportunity cost is the magic set. And if he buys the magic set, the opportunity cost is the Monopoly game. If a town hires an extra police officer instead of repaving several streets, the opportunity cost of hiring the officer is not repaving the streets. Opportunity cost is the cost of giving up the next best alternative. Thus scarcity forces us to choose. This idea is reflected in the following definition of economics: Economics is the study of how people, individually or collectively, allocate their limited resources to try to satisfy their unlimited wants. Commonly agreed-upon goals of macro policy include:
1. High employment. People suffer when many workers cannot find job and manufacturing plants and much machinery are idle.
2. Price stability. If average prices are volatile, people may be uncertain about how much their wages will buy or whether to consume now or invest in hopes of future returns.
3. Economic growth. People want higher incomes each year and most hope their children will be even more prosperous than they are.
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Microeconomics ( micro derives from the Greek word for small) studies the economic behavior of individual firms. Three major goals dominate micro policy:
1. Efficiency. An inefficient economy wastes resources and fails to provide the highest possible standard of living for consumers.
2. Equity. Huge gaps between the rich and the poor leave most people impoverished while a privileged few live luxuriously.
3. Freedom. Maximum freedom requires people to have the widest possible range of choices available.
In order to produce anything, we need resources, or factors of production. Factors of production are the inputs land, labour, and capital (buildings and machinery) we use to produce final goods and services (output). From an economist's standpoint, resources refer to anything that can be used to produce products, that is, either goods or services.
Every society, from a tiny island nation in the Pacific to the most complex industrial giants, needs these resources: land, labour, capital and entrepreneurial ability. Land and capital are referred to as material resources. Labour and entrepreneurship are referred to as human resources. These are resources for the economy as a whole.
As a resource, land has a much more general meaning than our normal understanding of the word. Economists use the term landin a broad sense to include not only agricultural land and land for building sites but also other natural resources like minerals, water, and timber. The basic payment made to the owners of land is rent.
Capital. In economic terms, capitalis man-made goods used to produce other goods or services. Equipment, buildings, tools as well as the money that buys other resources are capital goods.
Labour. The efforts of a factory worker, a lawyer, a sales representative, or anyone who works for a business are defined as labour.
Entrepreneurial ability is the least familiar of four basic resources. The entrepreneur sets up a business, assembles the needed resources, risks his or her own money, and reaps the profits or absorbs the losses of this enterprise.
Although all economies rely on the same basic factors of production, not all are blessed with the same quantity and quality of resources. Besides each economic system reflects the countrys history, traditions, aspirations, and politics. What works for one culture might not work as well for another, and vice versa.
1.What is economics concerned with?
2.What does macroeconomics investigate?
3.Why does scarcity occur?
4.What are the main goals of macro policy?
5.What does microeconomics study?
6.What do resources refer to?
7.How many factors of production does the economic system use? What are they?
Text 3
Engineering economics
Engineering economics, previously known as engineering economy, is a subset of economics for application to engineering projects. Engineers seek solutions to problems, and the economic viability of each potential solution is normally considered along with the technical aspects. In the U.S. undergraduate engineering curricula, engineering economics is often a required course. It is a topic on the Fundamentals of Engineering examination, and questions might also be asked on the Principles and Practice of Engineering examination; both are part of the Professional Engineering registration process. 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.For each problem, there are usually many possible alternatives. One option that must be considered in each analysis, and is often the choice, is the do nothing alternative. The opportunity cost of making one choice over another must also be considered. There are also noneconomic factors to be considered, like color, style, public image, etc.; such factors are termed attributes.
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Costs as well as revenues are considered, for each alternative, for an analysis period that is either a fixed number of years or the estimated life of the project. The salvage value is often forgotten, but is important, and is either the net cost or revenue for decommissioning the project.Some other topics that may be addressed in engineering economics are inflation, uncertainty, replacements, depreciation, resource depletion, taxes, tax credits, accounting, cost estimations, or capital financing. All these topics are primary skills and knowledge areas in the field of cost engineering.Since engineering is an important part of the manufacturing sector of the economy, engineering industrial economics is an important part of industrial or business economics. Major topics in engineering industrial economics are:the economics of the management, operation, and growth and profitability of engineering firms; macro-level engineering economic trends and issues; engineering product markets and demand influences; and the development, marketing, and financing of new engineering technologies and products.
Key Words
Economics
Subset
To seek
Viability
Curriculum
Examination
Estimate
Salvage value
To term
Attribute
Cost
Revenue
To discount
Interest rate
Inflation
Replacement
Depreciation
Depletion
Net cost
Uncertainty
To decommission
Accounting
Tax
Tax credit
Primary
Profitability
Trend
Issue
Exercise 1. Answer the questions
1. What is engineering economics?
2. What do engineers seek?
3. Is engineering economics a required course in the U.S. undergraduate engineering curricula?
4. Considering the time value of money is central to most engineering economic analyses, isnt it?
5. Are cash flows discounted using an interest rate?
6. Are there possible alternatives for each problem?
7. Must the opportunity cost be considered?
8. Are there noneconomic factors to be considered?
9. Are costs usually considered?
10. Is engineering an important part of the manufacturing sector of the economy?
11. What are major topics in engineering industrial economics?
