Salazar Colleges of Science and Institute of Technology
Salazar Colleges of Science and Institute of Technology
Salazar Colleges of Science and Institute of Technology
TECHNOLOGY
Because we live in a resource-constrained world, engineering must be closely related
to economics.
=
Determination of objectives
Success is not a direct result of the construction of a new device; rather, it depends on the capability of
the invention to satisfy human needs.
Know what you need to address.
Determination of means
Engineers alter the physical world to determine the ways to carry out the plan.
Utility
The power to satisfy human wants (general economic meaning)
The utility that an object has for an individual is not determined by him or her.
The utility of an object has for the person is the satisfaction he or she derives from it. Value
is an appraisal of utility in terms of a medium of exchange.
Utility of an object can vary from time to time, depending on physical factors.
The purpose of much engineering effort is to determine how physical factors may be altered
to create the most utility for the least cost in terms of the utilities that must be given up.
Consumer Goods
Products and services that directly satisfy human wants.
Utility a consumer applies to goods is a result of subjective, non-logical mental processes.
Producer Goods
Also satisfy human wants but do so indirectly as part of the production or construction
process.
Producer goods are used from producing consumer goods.
An intermediate step in peoples efforts to satisfy their wants.
Utility is objective. It is considered by logical processes limited only by factual knowledge
and the ability to reason.
Economic Aspects of Exchange
Economy of exchange occurs when utilities are exchanged by two or more people.
Can be viewed from two perspectives, the lender and the borrower.
The Earning Power of Money
This is from the notion that it is profitable to borrow.
Example:
Racel manually digs ditches for underground cable. He is paid $0.40 per linear foot and
averages 200 linear feet per day.
Due to weather conditions, he can only work 180 days in a year. So, he makes $14,400 per
year.
He buys a power ditcher worth $8000 dollars after borrowing the amount at 16% interest.
The machine will dig an average of 800 linear feet per day. By reducing the price to $0.30
per linear foot, he can get sufficient work to keep the machine busy when the weather will
permit.
Estimated operation of maintenance costs for the ditching machine are at $40 per working
day. At the end of the year, the machine is worthless because it is worn out.