Forrest J. Cavalier III writes: > I am not even close to being an economist. I can recall taking > only one econ course (and it wasn't very good.) Being an economist is not a result of classes taken or certificates gained. It's a way of thinking. > Is IRR a metric only for companies that remain in business? Does > risk get ignored in the calculation? IRR is basically a metric on what to spend more money on. A product in general requires a mix of inputs. Each of these inputs has a cost, and each of them contributes to the profits produced by a product. Some of them go into each product and have an obvious IRR. If you need two X's which cost $1, and two Y which cost $0.25, and you can re-engineer your product so that it can use three Y and one X, you'll increase the IRR of the Y you purchase. Same thing for goods and services which aren't a part of the cost of goods sold. IT has been one of the more productive investments in a company for at least the last twenty years. No reason to believe that's going to change any time soon. For example, the local newspaper just put in a new printing press which lets them change the content of the newspaper *on the fly* (only the black plate, and it ruins twenty papers in the process). All the moving parts on the press are synchronized, not through gears, but through separate computer-controlled motors. > My understanding (very non-expert) was that microeconomics and > macroeconomics were separated due to the inability to expand the > tools, measurements, and theories of one branch far enough into > the other branch to be accurate. Is my understanding wrong or > outdated? Not sure which. In any case, macroeconmics is a load of hooey. Microeconomics, and in particular, price theory, has reasonable predictive value. And apropos the Free Software Business mailing list, if you're setting prices for your company's products and services, and you don't understand price theory, you aren't setting them correctly. David D. Friedman has an excellent introduction to price theory textbook free on his website (the altogether too predictable http://www.daviddfriedman.com). -- -russ nelson http://russnelson.com | Crynwr sells support for free software | PGPok | businesses persuade 521 Pleasant Valley Rd. | +1 315 268 1925 voice | governments coerce Potsdam, NY 13676-3213 | +1 315 268 9201 FAX |