CHAPTER 1

INTRODUCTION TO ECONOMIC SYSTEMS ANALYSIS AND ASSESSMENT: COST, VALUE, AND COMPETITION IN INFORMATION AND KNOWLEDGE INTENSIVE SYSTEMS, ORGANIZATIONS, AND ENTERPRISES

1.1 INTRODUCTION

This book is about one of the fundamental concerns in the engineering and management of systems of all types, and especially those with a major telecommunications and information network focus: the economic behavior of these systems. We discuss the very important role of economics in shaping our lives and designing our activities and institutions to achieve economic (and other) objectives. The purpose of this book is to present those fundamentals of classic and modern microeconomic systems analysis and assessment that are most necessary in the engineering and management of systems of machines, humans, and organizations that are effective and efficient, and equitable as well. We desire to equip ourselves to answer three fundamental questions:

1. What should be produced and how much of it should be produced?

2. How should the goods be produced?

3. Who should get the goods and services that are produced?

The first of these questions relates to effectiveness, the second to efficiency, and the third to equity concerns. There are a number of related concerns. Many other questions, and their answers, are also important. We are generally concerned with why, where, and when artifacts as well as what, how, and who. For example, we surely wish to ensure sustainability, by preserving the natural resource ...

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