Engineering Economics notes

Notes/Engineering Economics/index.md

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+# Engineering Economics
+
+## Chapter 1: Introduction to Economics
+
+### Introduction
+
+Every field of study has its own unique language and way of thinking. Mathematics communicates through the precise terms of algebra and calculus, while science relies on empirical methods involving experiments and observation. Economics, too, has its distinctive framework and terminology. It investigates how society allocates scarce resources to satisfy unlimited wants and needs, employing concepts such as supply and demand, opportunity cost, and market equilibrium.
+
+### Meaning of Economics
+
+Economics is a social science that studies the way a society chooses to use its limited resources, which have alternative uses, to produce goods and services and to distribute them among different groups of people.
+
+Various definitions of economics developed over the course of history have been broadly divided into four parts:
+
+1. **Wealth Definition by Adam Smith**
+2. **Welfare Definition by Alfred Marshall**
+3. **Scarcity Definition by Lionel Robbins**
+4. **Growth-Oriented Definition by Samuelson**
+
+### 1. Wealth Definition
+
+According to Adam Smith, economics is a science of wealth. Early economic studies focused on wealth accumulation. Here are the main features of this definition:
+
+1. **Focus on Wealth Accumulation:** This definition is primarily concerned with the generation and accumulation of wealth, viewing the creation of goods and services as the main goal of economic activity. It highlights the significance of increasing national wealth to improve living standards and drive economic prosperity.
+
+2. **Production and Distribution:** It emphasizes understanding the processes involved in producing and distributing wealth among society's members. Grasping these processes is essential for developing policies that enhance economic growth and ensure equitable distribution.
+
+3. **Rational Economic Behavior:** This approach assumes individuals act rationally to maximize their wealth and self-interest, introducing the idea of the economic man. This assumption simplifies the analysis of economic behavior and decision-making, forming a basis for early economic theories.
+
+4. **Materialistic Orientation:** This definition focuses mainly on material goods and services as the core components of wealth, with less emphasis on non-material aspects like human welfare and well-being. This material focus laid the foundation for industrial and commercial advancements in early economic development.
+
+5. **Importance of Market and Trade:** It stresses the role of market and trade in wealth production and distribution, viewing free market and competition as crucial for efficient wealth creation. This emphasis on markets aids in understanding how market dynamics affect economic outcomes and wealth accumulation.
+
+6. **National Wealth Perspective:** The definition is concerned with the wealth of nations rather than individual or community health. It focuses on economic activities and their impact on the overall economy.