ENGINEERING ECONOMICS
AE 656
Lectures : 3 Year : III
Tutorials : 1 Part : II
Practical : 0
Course Objective:
After completion of this course the
students will be able to:
·
Understand
the basic terms, concepts and principles of economics required for management
decisions.
·
Prepare
simple farm planning and budgeting to modify existing tools and equipment for
better crop production or repair and maintenance work of them.
·
Carryout
the simple economic and financial analysis in the field of agricultural
engineering.
1. Basic Terms and Concepts in Economics [10 hours]
1.1
Definition
and Scope
1.2
Basic
Concepts of Goods, Utility, Value, Wealth, Equilibrium and Margin
1.3
Consumption
and Indifference Curve- Meaning, Types and Properties and Price Effects and
Income Effects
1.4
Law
of Diminishing Marginal Utility- Meaning, Assumption, Limitations and
Exceptions
1.5
Law
of Demand and Elasticity of Demand
1.6
Law
of Supply and Elasticity of Supply
1.7
Concept
of Cost Curve
1.8
Types
of Cost- Real, Opportunity, Implicit, Explicit, Social, Fixed, Variable and
Marginal
1.9
Short
Run and Long Run Cost Analysis
1.10Market and Price
Determination:
-
Market
Forms
-
Characteristics
of Perfect Competition Market
-
Characteristics
of Monopoly Market
-
Characteristics
of Monopolistic Market
2.
Production
Economics Related to Management Decision [10
hours]
2.1 Production
Economics and its objectives
2.2 Production
Relationships:
-
Factor-
Product Relationships
-
Factor-Factor
Relationships
-
Product-Product
Relationships
2.3 Principles Involved
in Management Decisions
-
Principle
of Diminishing Return
-
Cost
Principle
-
Principle
of Substitution
-
Principle
of Combining Enterprises
-
Principle
of Equi-marginal Returns
-
Principle
of Comparative Advantage
-
Principle
of Time Comparison
3.
Tools of Farm
Management [9
hours]
3.1 Farm Planning
3.2 Farm Budgeting:
-
Partial
Budgeting
-
Complete
Budgeting
3.3 Farm Business
Analysis:
-
Farm
Records and Accounts
-
Farm
Inventory
-
Measuring
Financial Condition
-
Measuring
Farm Profits
-
Farm
Prices and Production Efficiency
-
Factors
Affecting Farm Costs and Income
4.
Economic and
Financial Analysis [8
hours]
4.1 Definition of Cash
Flow
4.2 Interest and Time
Value of Money:
-
Simple
Interest
-
Compound
Interest
-
Interest
Tables and Charts
4.3 Compounding Factors
4.4 Methods of Economic
Analysis:
-
Present
Value Method
-
Future
Value Method
-
Internal
Rate of Return Method
-
Benefit/Cost
Ratio Method
-
Breakeven
Analysis
-
Payback
Period Method
4.5 Financial Analysis
4.6 Risk and
Sensitivity Analysis
5.
Investment
Decisions [8
hours]
5.1 Comparison of
Alternatives having same useful life
5.2 Comparison of
Alternatives having different useful life
5.3
Comparison
of Alternatives including and excluding the time value of money
5.4 Comparison of
Alternatives using Capitalized Worth Method
5.5 Comparison of
Mutually Exclusive Alternatives
Tutorials
Tutorial shall be used in problem solving
on such farm management decisions as- profit maximization, optimal input
decision, least cost combination and on farm inventory and farm budgeting. In
addition case studies on economic analysis of such projects relating to the
areas of Agricultural Engineering as- Agricultural Mechanization, Soil
Conservation and Watershed Management, Irrigation and Water Management, shall
be discussed as case studies. Students shall be given assignments based on
these case studies.
References:
i.
Small
Business Management: An Entrepreneur's Guidebook by Megginson, I.C., Byrd M.J.
and Meginson W.I. McGraw Hill Book Co.
ii.
Walter
J. Wills. An Introduction to Agricultural Business Management
iii. Economic Analysis
for Engineering and Managerial Decision Making by N.N. Borish and S. Kaplan.
McGraw Hill Book Co.
Evaluation
scheme:
The
questions will cover the entire chapter of the syllabus. The evaluation scheme
will be as indicated in the table below:
|
Chapter
|
Hours
|
Marks Distribution*
|
|
1
|
10
|
15
|
|
2
|
10
|
20
|
|
3
|
9
|
15
|
|
4
|
8
|
15
|
|
5
|
8
|
15
|
|
Total
|
45 hrs
|
80
|
*There may be mirror deviation in marks
distribution.
Ø
The
questions setting should be in the multiplication of either 8 or 10.
source:-Department of Agricultural Engineering
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