Economic analysis is the systematic examination and evaluation of various economic indicators, trends, and factors to uncover insights that inform decision-making and shape economic policies. It encompasses a wide range of methods such as economic modeling, statistical analysis, cost-benefit analysis, and scenario analysis.
A common assumption in economic analysis is the concept of efficient production or the production possibilities frontier (PPF). Efficient production refers to an economy using its current resources and technology to produce the most goods possible. It is often associated with the graphical device known as the production possibilities frontier, which displays an economy’s efficient production levels for two goods. This production possibilities framework also illustrates an important economic principle called opportunity cost, which is the value of the highest-valued alternative that was forgone by making a particular choice or decision.
One of the most important considerations in conducting economic analysis is to take a societal perspective when examining costs and benefits. This involves accounting for all potential costs and benefits incurred or received regardless of who pays or receives them (e.g., patients and their families, taxpayers, employers, health care providers, other health care system users, etc.). In addition, it is important to avoid falling into the trap of the false-cause fallacy in which two correlated actions or events are assumed to have caused each other.
Finding a topic for an economic analysis can be difficult, but it is important to choose something that you can investigate with available resources. A good place to start is by reviewing course materials and assigned readings for relevant information or trends. In addition, you can also look for economic issues in the news or in ongoing debates. Once you have a few ideas, it is helpful to discuss them with your instructor or classmates to ensure that they are both interesting and feasible.