This project demonstrates how the design activity, fully integrated with economic principles, can be effectively utilized to teach the engineering science component of the undergraduate curriculum. A course is developed and taught that utilizes a design paradigm to teach engineering science principles in thermodynamics, heat transfer, and fluid dynamics. Integrated in this subject matter are economic principles concerned with costing, design for manufacture and selection of design alternatives. Additionally, a new course dealing with the economics of engineering design that bridges from the lower to the upper division is developed. Professors from 4 different universities are involved in preparing educational materials for this new course and for the economics components of the modified engineering science core courses. Computer software and computer-based teaching aids focusing on the means for estimating cost-to-manufacture for various thermosystem components are developed. Case studies focusing on economics principles in design are initiated. Course materials such as computer modules of an intelligent tutoring system are developed.