How is microeconomics useful for engineers?

Pull up a stool and your favorite drink and tell me if knowing econ has or has not been useful in your engineering career.

I have a student from my Intro to Engineering class who wants to study aerospace, and absolutely doesn’t see the point of having to take microecon. I told him that engineering is also about understanding the cost side of design, and it’s another opportunity to grow his problem-solving skills. What else should I tell him? And yes, the class is required, so it’s all a bit philosophical.

For someone that hasn’t done the business or management side of engineering as of yet, a basic understanding of economics is helpful because it can be a place to derive limiting conditions for poorly defined problems. The better you can understand the money, the more likely you are know how the world goes 'round, and sometimes make it go 'round the way you’d like.

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I often wish I had had a better handle on what stuff costs during my engineering days.

Tell him an engineer is a person who can do for a dollar what any damm fool can do for three.

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It really depends on if the micro economics class teaches practical application or abstract theory.

a branch of economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.

Yeah, who cares…

How do I apply the output of the people that study this?


As a Junior in High School, I volunteered to drop Chemistry after Mr. Phillips explained we had 29 students, but only had 28 spots at the lab benches. Plus, he said the person that did volunteer would automagically get an “A” next year. (It wasn’t needed; I won the “Chemistry Award” my Senior year.)

Anyway, one of the classes I could subtitute for Chemistry was “Bookkeeping”. When I was discussing which course to take with the school counseller, she said, “A poor engineer that always knows how to turn a profit for the company will be employed for life”. So I took bookkeeping. That was 45 years ago. Besides making me a better Engineer, my persoanl finances are orderly and well documented.

My good experience with bookkeeping probably played a part in me choosing “Economics” and “Engineering Economics” as electives in my ChE discipline at University. I am so glad I did! That knowledge has benefited me tremendously over the years at work and at home.


I feel it is a subject an engineer can either take a formal course on during their education or something an engineer will need to teach themselves.

Either way, it is necessary knowledge to be a productive and efficient engineer.

Undertaking such a class and gaining an understanding of economics will be made worthwhile the very first time someone asks “Why are we buying Widget A versus Widget B? Widget B is $X cheaper.” Understanding the value of Widget A vs. Widget B, as well as the life cycle cost, etc. are necessary to not only make the best decision in specifying and selecting components, but also in justifying your decisions to those signing the checks, as it were.

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Thanks, all. Very helpful responses.

As an exercise, give the student a real world set of economic choices that directly affect the student, for example:

  1. Say, the student graduates in aerospace engineering and takes a job with a large company in that field, perhaps Boeing.

  2. Boeing has a voluntary 401(k) plan with 17 investment choices (covering real estate, international equity, US equity, and fixed income). Summary of Boeing Co. 401(k) Investment Options

  3. Should this new employee participate in the 401(k)? Which investment choices, if any, are appropriate? How much money, if any, should be routinely invested?

Microeconomics probably will not help with these decisions… but where else will the student get the basic on how to make this type decision?

Subjects like supply and demand can be learned by engineers, either from “the trenches” by discovering that the price per unit for a raw material goes down as you order more, or from “bird’s eye view” by taking a class in microeconomics.
Some lucky engineers discover that their inventions are both patentable and may be marketable. Figuring out the value of these properties requires some insight into economics (and finance, sadly) to make a rational decision.
More examples of the value of an economics class or two can easily be brought to mind, if needed.

“…the invisible hand…”


Every project of mine and those I was assigned had to have an economic payback. I had to know how to determine the cost of a project, its payback, and its payback period. There were some tough economic hurdles to overcome and if a project didn’t jump those hurdles, there was no project. It’s a great way to develop a sense of why to do any project and why to invest in any technology. It teaches you to really dig into technology, processes, problems, etc. to root out all of the problems and how much those problems cost, i.e., take away from your profit margin. It also teaches you how to talk to people about all of those things. Nothing happens without the knowledge and help of others.

As my career progressed, I was expected to do depreciation calculations of equipment as part of project justification. There are multiple ways to view depreciation and it’s important to understand those differences.