Introduction of Economics of IT

Question 1

What is Moore’s Law?

Answer 1

The observation that the number of transistors on a microchip doubles every 18-24 months.

Question 2

What is the Hype Cycle?

Answer 2

A graphical representation of the life cycle of a new technology or innovation.

Question 3

What are the 5 phases of the Hype Cycle?

Answer 3

Technology Trigger, Peak of Inflated Expectations, Trough of Disillusionment, Slope of Enlightenment, Plateau of Productivity

Question 4

Give the 5 reasons investments in IT can lead to good outcomes.

Answer 4

• Improved Efficiency
• Enhanced Innovation
• Increased Customer Satisfaction
• Improved Decision-Making
• Better work-life balance

Question 5

Give the 5 limitations that can prevent IT investments from having good results.

Answer 5

• Obsolescence of old technologies
• Cost of learning
• Other infrastructures
• Poor IT management
• Not Used Well

Question 6

What is the IT productivity paradox?

Answer 6

The phenomenon that despite significant investments in IT by firms, there is a lack of significant improvement in productivity in 1970s and 1980s.

Question 7

Why were the productivity benefits of IT investments not visible in 1970s?

Answer 7

• Time lag between investment and realisation of benefits
• Uneven distribution of benefits, only seen with complementary investments in other resources like human capital