UNIT 1 
                    What is the scope of engineering economics? 
                    Engineering Economics is a subject of vital importance to Engineers. This subject 
                    helps one understand the need for the knowledge of Economics for being an 
                    effective manager and decision maker. It offers wide opportunities in developing 
                    countries like India. An engineering aspirant can perform the following roles: 
                      1.  Demand analysis and forecasting 
                      2.  Production and cost analysis 
                      3.  Product policy, sales promotion, and marketing strategy 
                      4.  Profit management 
                      5.  Capital management 
                      6.  Pricing decisions, policies, and practices 
                     
                    Microeconomics vs. Macroeconomics: What's the 
                    Difference? 
                    Economics is divided into two different categories: microeconomics and 
                    macroeconomics. Microeconomics is the study of individuals and 
                    business decisions, while macroeconomics looks at the decisions of 
                    countries and governments. 
                    While these two branches of economics appear to be different, they are 
                    actually interdependent and complement one another. Many overlapping 
                    issues exist between the two fields. 
                    KEY TAKEAWAYS 
                         •    Microeconomics studies individuals and business decisions, 
                              while macroeconomics analyzes the decisions made by countries 
                              and governments. 
                         •    Microeconomics focuses on supply and demand, and other forces 
                              that determine price levels, making it a bottom-up approach. 
                         •    Macroeconomics takes a top-down approach and looks at the 
                              economy as a whole, trying to determine its course and nature. 
                         •    Investors can use microeconomics in their investment decisions, 
                              while macroeconomics is an analytical tool mainly used to craft 
                              economic and fiscal policy. 
                         •     
                    Microeconomics involves several key principles including (but not limited 
                    to): 
                         •    Demand, Supply, and Equilibrium: Prices are determined by the 
                              theory of supply and demand. Under this theory, suppliers offer the 
                              same price demanded by consumers in a perfectly competitive 
                              market. This creates economic equilibrium. 
                         •    Production Theory: This principle is the study of how goods and 
                              services are created or manufactured. 
                         •    Costs of Production: According to this theory, the price of goods 
                              or services is determined by the cost of the resources used during 
                              production. 
                         •    Labor Economics: This principle looks at workers and employers, 
                              and tries to understand the pattern of wages, employment, 
                              and income.  
                    WHAT IS DEMAND THEORY? 
                    Demand theory is an economic principle relating to the relationship 
                    between consumer demand for goods and services and their prices in 
                    the market. Demand theory forms the basis for the demand curve, which 
                    relates consumer desire to the amount of goods available. As more of a 
                    good or service is available, demand drops and so does the equilibrium 
                    price. 
                    Understanding Demand Theory 
                    Demand is simply the quantity of a good or service that consumers are 
                    willing and able to buy at a given price in a given time period. People 
                    demand goods and services in an economy to satisfy their wants, such 
                    as food, healthcare, clothing, entertainment, shelter, etc. The demand 
                    for a product at a certain price reflects the satisfaction that an individual 
                    expects from consuming the product. This level of satisfaction is referred 
                    to as utility and it differs from consumer to consumer. The demand for a 
                    good or service depends on two factors: (1) its utility to satisfy a want or 
                    need, and (2) the consumer’s ability to pay for the good or service. In 
                    effect, real demand is when the readiness to satisfy a want is backed up 
                    by the individual’s ability and willingness to pay. 
                    KEY TAKEAWAYS 
                         •    Demand theory describes the way that changes in the quantity of a 
                              good or service demanded by consumers affects its price in the 
                              market, 
                         •    The theory states that the higher the price of a product is, all else 
                              equal, the less of it will be demanded, inferring a downward sloping 
                              demand curve. 
                         •    Likewise, the more demand that occurs, the greater the price will 
                              be for a given supply. 
                         •    Demand theory places primacy on the demand side of the supply-
                              demand relationship. 
                    The law of demand introduces an inverse relationship between price and 
                    demand for a good or service. It simply states that as the price of a 
                    commodity increases, demand decreases, provided other factors remain 
                    constant. Also, as the price decreases, demand increases. This 
                    relationship can be illustrated graphically using a tool known as the 
                    demand curve. 
                    The demand curve has a negative slope as it charts downward from left 
                    to right to reflect the inverse relationship between the price of an item 
                    and the quantity demanded over a period of time. 
                    DEMAND FUNCTION 
                    A demand function is a mathematical equation which expresses the demand of 
                    a product or service as a function of the its price and other factors such as the 
                    prices of the substitutes and complementary goods, income, etc. 
                    A demand functions creates a relationship between the demand (in quantities) 
                    of a product (which is a dependent variable) and factors that affect the 
                    demand such as the price of the product, the price of substitute and 
                    complementary goods, average income, etc., (which are the independent 
                    variables). 
       INVERSE DEMAND FUNCTION 
       A supply and demand graph is typically plotted such that quantity is on x-axis 
       and price is on y-axis but the demand function we defined above has price (P) as 
       an independent variable and quantity (Q) as an independent variable. 
            Exceptions to The Law of 
                       Demand 
       There are two exceptions to the Law of Demand. Giffen and Veblen 
       goods are exceptions to the Law of Demand. However, they are 
       extreme cases and can be quite difficult to prove. But economists 
       generally agree that there are rare cases where the Law of Demand 
       is violated. 
       The Law of Demand states that the quantity demanded for a good 
       or service rises as the price falls, ceteris paribus (or with all other 
       things being equal). Therefore, the Law of Demand is an inverse 
       relationship between price and quantity demanded. 
                    Giffen Goods 
       A Giffen good is considered to be an exception to the Law of 
       Demand. The unique features of a Giffen good results in quantity 
       demanded increasing when there is an increase in price. As stated 
       earlier, the Law of Demand states that the quantity demanded 
       should decrease with an increase in price (the inverse relationship). 
       Sir Robert Giffen observed that when the price of bread increased, 
       the low-paid British workers in the early 19th century purchased