Macro Economics | Economics Related to Building Industry

Study of Macro Economics

Study of Economics can be divided into two parts:

  1. Micro Economics
  2. Macro Economics

In this article, we are going to discuss various terms related to Micro Economics. Check out the brief on “Macro Economics and Micro Economics“.

Here is the list of terms we are about to discuss in this article:

  1. Demand and supply
  2. Inflation
  3. Interest rate
  4. Employment
  5. Savings and Investments
  6. Monetary Policy
  7. Fiscal Policy

Demand and Supply

At national level, this depends on the government policies. How different building activities and infrastructure are planned and budgeted. Taxation polices, direct and indirect tax, allocation of funds for housing for the weaker sections in Five Year plans.


This aspect depends on how effectively the government can control inflation by exercising control over general price rise and building materials, effective tax collection both at central and state level, maintaining equilibrium in demand and supply, earning foreign exchange. The increase in oil prices invariably increase the cost of living in all walks of life including building industry.

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Introduction to Building Economics as related to Architecture

Introduction to Building Economics

Building economics is concerned with production and consumption and services and the analysis of commercial activities –

As it is related to architecture and building activity – all types of buildings for all types of functions by the builders (production) and consumption i.e., the ones who either buy or hire those buildings for various functions with the services offered by professionals like architects, planners, engineers etc.

Ends – scarce means

The scarce means like land, building materials, and allied services result in failing to meet the deman in housing sector.

Basic concept – any activity (legally permitted) which shall result in building activities to serve people for which the people are ready to pay the price directly or indirectly by buying or hiring the spaces can be treated as an economic activity.

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Basic Inputs into Building Construction | Engineering Economics

Building Construction Economics

We will be discussing Inputs into Building Construction in terms of four important factors:

  1. Land
  2. Labour
  3. Capital
  4. Materials


Marshall defines Land “Land means the materials, and the forces which nature gives us freely for the human beings (other creatures as well), in land, in water, in air, light and Heat”.

  • Land is nature’s gift
  • Land has no supply price (supply remains same) whether price of land is high or low
  • Land is permanent (lack of mobility)
  • Land lacks mobility in geographic sense
  • Provides infinite variation in fertility, utility, situation etc

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Equity Versus Efficiency | Building Economics

Efficiency in Economics Capability and able to perform duties well. The efficiency in production of building materials is high as there is competition and those who work in production are offered annual bonus depending upon the profits made by companies. The efficiency in construction industry is generally high if the projects are handled by Architects, … Read more