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Prepared by :Prepared by :
Dr. K. BARANIDHARANPROF.MBA
SRI SAIRAM INSTITUTE OF TECHNOLOGYCHENNAI
ENGINEERING ECONOMICSAND
FINANCIAL ACCOUNTING
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EngineeringEconomics& Financial
Accounting ment
E e f a330 July 2014
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ENGINEERING ECONOMICS
Engineers have an addedresponsibility and that is to include
economics in their calculation &decisions. When the economicsprinciples are applied to engg.Problems, then a new branch ofknowledge called engineering
economics Sri Sairam Institute of Technology 4
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What is Economics? The word Economy derived from the Greek
word okios which meanshousehold
Human wants are unlimited Resources available to satisfy these wants
are scarce / limited People wants to maximize their
gains The science of making decisions in the
presence of scarceresources.
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ECONOMICS Economics is a social science
that studies the behavior ofhuman beings. Organizationor any entity mode up ofhuman beings in situationsinvolving choice .
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ECONOMIC ACTIVITIES
The activities are carried out withthe purpose of earning onincome or making money, theyare called economic activities .
Activities involvue MONEY Earning income in either CASH or
KINDSri Sairam Institute of Technology 7
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NON-ECONOMIC ACTIVITIES
The activities that are
performed out of LOVE,affection and social
concern but not formoney
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PROFESSION
Profession is an occupation carried on byprofessional people like Doctors, Lawyers,Engineers, etc.
They provide specialised services in returnfor fees.
To become a professional, a man requiresspecialized knowledge and professionalqualification. For e.g. Doctor needsspecialised knowledge in medicine, alaw er needs a de ree in law etc.
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EMPLOYMENT
Employment is a type of occupationunder which one person provides hisservices, physical or mental to
someone else in return for which hegets salary or wage.
The person who employs is calledemployer and the person who isemployed is called employee or
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BUSINESSBusiness is an economic activity concerned with
production and distribution of goods andservices with the aim to earn profit .
It includes all those activities which are directlyor indirectly concerned with production,purchase and sale of goods and services.
So the production, marketing, advertising,warehousing, insurance, banking , etc. are allbusiness activities.
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ECONOMIC CIRCLE
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ECONOMICS - DEFINITION FATHER OF ECONOMICST:- Adam Smith defined
economics as Economics is the sciences ofwealth
wealth? Wealth has been defined as stock of goods
existing at a given time that have money value . classification of wealth. Personal wealth(individual wealth) Social wealth( collective wealth) National wealth (a+b) Cosmopolitan wealth (e.g. ocean)Sri Sairam Institute of Technology 14
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Alfred Marshall Economics isdefined as a study of mankindin the ordinary business of life
Lionel Robbins :Economics is thescience which studies humanbehaviour as a relationship
between ends and scarce meanswhich have alternative uses
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MICRO ECONOMICS
Micro means small. Microeconomics deals with
problems such as the output ofa single firm, price of a single
commodity and spending ongoods by a single household.
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MACRO ECONOMICS
Macroeconomics studies theeconomic system as a whole . In it,
we get the complete picture ofthe working of the economy . It isa study of economic Aggregatesuch as total employment,savings, and investment
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DIVISION OF ECONOMICS
Consumption Production Exchange
Distribution Public Finance
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Types of the economic systems CAPITALIST ECONOMY: An economic system based on private
ownership of capital
Capitalism encourages privateinvestment and business, compared to agovernment-controlled economy.
Investors in these private companies (i.e.shareholders) also own the firms andare known as capitalists.
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MIXED ECONOMY
Both private
individuals andgovernmentparticipate in seekinganswers for the above
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FREE OR LAISSEZ-FARE ECONOMY
The economy where
government keeps itshands off such majoreconomic decisions.
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