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Engineering Economics A - E

Academic Year 2025/2026 - Teacher: SALVATORE CANNELLA

Expected Learning Outcomes

  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 provided 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.

The knowledge gained will be useful for better understanding economic dynamics, in line with goals 7, 8, 9, 11, 12, and 13 of the 2030 Agenda.

     

Course Structure

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

N.B. Should teaching be carried out in mixed mode or remotely, it may be necessary to introduce changes with respect to previous statements, in line with the programme planned and outlined in the syllabus. Learning assessment may also be carried out on line, should the conditions require it.

Required Prerequisites

Basic logical-mathematical skills. For the purpose of applying the principles of economic optimization, it is useful to have knowledge of: the concept of derivative of a real function of a real variable; the geometric meaning of the derivative; derivatives of elementary functions; operations with derivatives.

Attendance of Lessons

The attendance of classes is strongly recommended.

Detailed Course Content

Part 1 – Microeconomics: Study of the economic behavior of the individual economic agent, focusing on consumer choices, business decisions, and market dynamics (Theory 18 hours, Exercises 7 hours).

Part 2 – Macroeconomics: Study of the relationships between aggregate economic variables. Economic agents (businesses, consumers, government) are no longer seen from an individual perspective but as a collective of economic subjects (Theory 10 hours).

Part 3 – Financial and Economic Analysis of Projects: Application of decision-making criteria (Net Present Value, Internal Rate of Return, Payback, etc.) for evaluating various investment alternatives (Theory 2 hours, Exercises 3 hours).

Additionally, approximately 10 hours will be dedicated to course presentations, simulations, and end-of-course tests on exam.net, as well as any seminars held by professionals from academia and business, and clarifications and revisions of the topics covered during the course.

It is specified that the hours indicated for each course topic are purely indicative and may be subject to changes based on the teaching dynamics, with the goal of optimizing students’ learning performance.

Textbook Information

The teaching material, communications, and other relevant information are available on the course’s MS Teams channel. To register, please use the following password: e8ehaol
The slides will be uploaded to the course’s MS Teams channel before the in-class lectures/exercises. In addition, after the classroom exercises, the exercise solutions will be published. Students are also kindly asked to carefully study all the support documents available in the 'Important Information' folder of the course’s MS Teams channel (e.g.: guidelines for requesting assistance, exam instructions, instructions about the teaching material, etc.).

Recommended teaching material for Microeconomics and Macroeconomics:
Slides published on the course’s MS Teams channel

  • O’Sullivan A. et al. (2015). Elementi di Economia, Pearson. (relevant chapters available on the course’s MS Teams channel)
  • Robert H. Frank et al. Principi di Economia, 5th edition. McGraw-Hill Education (optional, for further study)

Recommended teaching material for Economic Analysis of Engineering Projects:

  • Slides published on the course’s MS Teams channel
  • Sullivan W.G. et al. (2006). Economia applicata all’ingegneria, Pearson. (optional, for further study)"

Course Planning

 SubjectsText References
1Introduction: What is EconomicsMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
2The fundamental principles of economicsMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
3Demand, supply and market equilibriumMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
4Elasticity: A measure of responsivenessMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
5Production technology and costsMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
6Perfect competitionMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
7Monopoly Material provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
8Measuring the output and income of a nationMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
9Inflation and unemploymentMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
10Money and Banking SystemMaterial provided by the instructor. For further readings: O’SULLIVAN A., SHEFFRIN S.M., PEREZ S.J., BIANCHI C. (2015). Elementi di Economia, Pearson.
11Economic and Financial Analysis of Investments: Cash Flows and Key Decision CriteriaMaterial provided by the instructor. For further readings: SULLIVAN W.G., WICKS, E.M., LUXHOJ (2006). Economia applicata all’ingegneria. Pearson.
12Economic and Financial Analysis of Investments: Choosing between Project AlternativesMaterial provided by the instructor. For further readings: SULLIVAN W.G., WICKS, E.M., LUXHOJ (2006). Economia applicata all’ingegneria. Pearson.

Learning Assessment

Learning Assessment Procedures

The exam consists of a written test on the theory of Microeconomics and Macroeconomics, as well as practical exercises on Microeconomics and Economic Evaluation of Engineering Projects. The test lasts for 50 minutes and includes the following sections:

- 8 open-ended and/or multiple-choice questions (16 points)

- 1 practical exercise on Microeconomics (8 points)

- 1 practical exercise on Economic Evaluation of Engineering Projects (8 points)

Each question can be awarded a maximum score of 2, and each exercise can earn 8 points, making a total maximum score of 32 points. If a student scores above of 30, they will be awarded a mark of 30 cum laude.

Moreover, students have the option to take a midterm test at the end of the course, following the same assessment format as the final exam.

The exam schedule will be published on the degree course website.


Examples of frequently asked questions and / or exercises

The following list is purely exemplary.

Microeconomics:

  1. What is the difference between elastic demand and inelastic demand?

  2. When does oversupply occur?

  3. What criterion does a perfectly competitive firm follow to determine the level of production?

Macroeconomics:

  1. What is the difference between real GDP 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 Net Present Value (NPV) of a project.

  2. Calculation of the Internal Rate of Return (IRR) of the project.

  3. What are the advantages of the payback method?