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2.0 INTRODUCTION

A market analysis is a study of the dynamism of the market. It is basically a business

plan that presents information regarding the market in which we interested with. By
taking into consideration certain factors, we will know how to operate the business.
The two main factors in market analysis are the analysis of supply and demand and
the economic evaluation of the production.

The analysis of supply and demand shows how a market mechanism solves
the three problems of what, how, and for whom. A market blends together demands
and supplies. Demand comes from consumers who are spreading their dollar votes
among available goods and services, while businesses supply the goods and services
with the goal of maximizing their profits.

To use supply-and-demand analysis correctly, we must distinguish a change

in demand or supply, which produces a shift of a curve from a change in the quantity
demanded or supplied, hold other things constant, which requires distinguishing the
impact of a change in a commodity's price from the impact of changes in other
influences and look always for the supply-and-demand equilibrium, which comes at
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the point where forces acting on price and quantity are in balance. Competitively determined
prices ration the limited supply of goods among those who demand them.

Economic evaluation refers to the evaluation of capital costs and operating cost
associated with the construction of the plant and the continuing costs associated with the
daily operation of the process are combined into meaningful economic are provided. In this
chapter, the concept of total fixed investment to construct a new production plant based on
Chemical Engineering Plant Cost Index is used to estimate the capital costs. Basic
components of the manufacturing costs of the process also discussed in this chapter, where
capital fixed investments, cost of operating labour, cost of raw materials, cost of utilities and
cost of waste treatment are calculated. Then, the engineering economic analysis is discussed
by using the concept of the time value of money. Evaluation of the profitability of chemical
processes is discussed using break even analysis and non-discounted are also presented.