SOLUTION OF THE QUESTION PAPEREngineering & Managerial Economics- EHU -50Q!A""em#" an$ "%o o"'e ollo%ing a( )Managerial Economics #la$s a *er$ cr+cial role in engineering, .ommen" Ans!Man ageri al Ec ono mic s #la $s a *e r$ cr +ci al role in eng ine er ing .The scope of managerial economics can be discussed under the following heads: 1. It h as w id e scope in manufacturing, construction, mining and other engineering industries. Examples of economic application are as follows: (i) Sele ction of location and si te fo r a new plant. (i i) r oduc ti on pl anni ng and c on trol. (ii i) Sel ect ion o f e!u ipment a nd th eir r epl acem ent an al" sis. (i#) Selection of a ma teri al handl ing s" stem. $. %ette r decisi on ma&in g on the part of eng ineers. '. Efficient use of resources results in better output and economic de#elopment. . ost o f production can be reduced. *. +ltern ati#e course s of action using economic princi ples ma" result in reducti on of prices ofgoods and ser#ices. . Eliminati on of waste can resul t in applicati on of engine ering economics. -. ore capit al will be made a#aila ble for in#estm ent and growth. /. Impro#e s the standard of li#ing with the resul t of bette r products, more wages, and sala ries, more output etc. from the firm appl"ing engineering economics. /( escri/e " 'e )la% oeman1, Ans!La% oeman1 2 3eman1 Price Rela"ions'i#( The relationship between prices and !uantit" demanded is called the 0law of demandin economics. The demand cur#e slopes downwards from left to right. The slope impl ies that price and !uantit" demanded are in#ersel" related, ceteris paribus. In other words: +n increase in the price leads to a fall in the demand and #ice #ersa. This relationship can be stated as 23ther things being e!ual, the demand for a commodit" #aries in#ersel" as the price4. 1