The crucial step in tackling almost all important business and government decisions begins with a single question: What is the alternative?
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Decision making lies at the heart of most important business and government problems. The range of business decisions is vast: Should a high‐tech company undertake a promising but expensive research and development (R&D) program? Should a petrochemical manufacturer cut the price of its best‐selling industrial chemical in response to a new competitor's entry into the market? Should the management of a food product company launch a new product after mixed test‐marketing results?
Likewise, government decisions range far and wide: Should the Department of Transportation impose stricter rollover standards for sports utility vehicles? Should a city allocate funds for the construction of a harbor tunnel to provide easy airport and commuter access? These are all economic decisions. In each case, a sensible analysis of what decision to make requires ...
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