Engineering Economics

1.Knowledge and understanding

The course introduces the knowledge of the principles of economic rationality and provides the basic methods for business decisions in the field of cost analysis, market analysis,and economic analysis of engineering design. Finally, the student is introduced to the main macroeconomic aggregates and basic models for the analysis of economic systems.

2. Applying knowledge and understanding

Upon completion of the course, students must be able, for each economic decision, to identify the cost items and the expected benefits. They must also be able to identify the variables of the macroeconomic context that are relevant to business decisions. Finally, they will have to be able to apply the main criteria for evaluating the economic value of a project.

3.Making judgments

Based on the basic principles learned, the student will be able to autonomously investigate further aspects relating to business and engineering decisions in the economic-financial field.

4.Communication skills

At the end of the course, the student must be able to communicate the reasons underlying the analysis of costs, of the market, and of engineering projects using specialized language.

5.Learning skills

The principles of economics introduced at the beginning of the course will be a basis for conveying further contents in the microeconomic, macroeconomic and engineering project fields. They can be used by the learner to refine and deepen their skill set through independent learning and knowledge acquisition.

Basic logical-mathematical skills. For the purposes of applying the principles of economic optimization, the knowledge of the following concepts is useful: derivative of a real function of a real variable,geometric interpretation of the derivative; derivatives of elementary functions; operations with derivatives; derivatives of higher order than the first; relative extremes of a function.

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 ofpayments, 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 sectorprojects.

For Part 1: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C.(2015). Elementi di Economia, Pearson.

For Part 2s: Learning material will be provided by the instructor. 

For more more advanced material see: SULLIVAN W.G., WICKS, E.M., LUXHOJ (2006). Economia applicata all’ingegneria. Pearson Prentice-Hall (this textbook is optional)

The exam is a written test of Microeconomics and Macroeconomics theory and application exercises ofMicroeconomics and Economic Evaluation of engineering projects.

The exam consists of a 70-minute written test which includes:

- 8 open and / or multiple choice questions on Microeconomics and Macroeconomics theory (Part 1) (16 points)

- application exercises of Microeconomics (Part 1) (8 points)

- application exercises of economic-financial evaluation of projects (Part 2) (8 points)

Each theoretical or practical question can be assigned a maximum score of 2, for a maximum total of 32 points. In the case of scores greater than or equal to 30.5, a grade of 30 with honors will be assigned. In other cases, dueapproximations will be made to convert the grade out of thirty. Specifically, in the case of scores equal to a decimal number, the vote will be rounded up if the decimal is greater than or equal to 5 (eg: 27.5 -> 28) and down if less than5 (eg: 27, 4 -> 27).

Furthermore, students who have regularly attended classes can take part in a final test at the end of the course, which will take place according to the same procedures for verifying learning as the exam test.

To ensure equal opportunities and in compliance with current legislation, interested students may request a personal interview in order to plan any compensatory and/or dispensatory measures based on educational objectives and specific needs. Students can also contact the CInAP (Centro per l’integrazione Attiva e Partecipata - Servizi per le Disabilità e/o i DSA) and the faculty in charge of CInAP within their department.”

The following list is purely illustrative.

Microeconomics:

1) How are average and marginal productivity in the short run calculated?

2) What is meant by increasing, constant and decreasing returns to scale?

3) What is the criterion followed by the firm in perfect competition to decide the production volume?

Macroeconomics

1) What is the difference between real and nominal GDP?

2) What are the economic institutions that create money and how?

3) What is meant by structural unemployment?

Project analysis

1) calculation of the NPV of a project

2) calculation of the internal rate of return of the project

3) calculation of an installment