Union College

Santa Cruz, Laguna

Term Paper in

ECONOMICS 2

Submitted by: Submitted to:

Leazar D. Ramos Dr. Dabao
Abstract

The paper provides an economic analysis system, a production process, or an

industry. It determines whether something is operating effectively.

Economics focuses on the behaviour and interactions of economic agents and

how economies work. Microeconomics analyzes basic elements in the economy,

including individual agents and markets, their interactions, and the outcomes of

interactions. Individual agents may include, for example, households, firms,

buyers, and sellers. Macroeconomics analyzes the entire economy (meaning

aggregated production, consumption, saving, and investment) and issues

affecting it, including unemployment of resources (labour, capital, and land),

inflation, economic growth, and the public policies that address these issues

(monetary, fiscal, and other policies).

Economic analysis can be applied throughout society,

in business, finance, health care, and government. Economic analysis is

sometimes also applied to such diverse subjects as

crime, education, the family, law, politics, religion, social institutions, war,

science, and the environment.

Introduction

Economic analysis is the study of economic systems. It may also be a

study of a production process or an industry. The analysis aims to determine

how effectively the economy or something within it is operating. For example, an

economic analysis of a company focuses mainly on how much profit it is making.

It is a process whereby the strengths and weaknesses of an economy are

analyzed. Economic analysis is important in order to understand the exact

condition of an economy. Macroeconomic issues are important aspects of the

economic analysis process.

An economic analysis is a process followed by experts to understand how key

economic factors affect the functioning of an organization, industry, region or any

other particular population group, with the purpose of making wiser decisions for

the future. It is a broader term that can mean simple and concise or sophisticated

and complex identification, study and projection of economic variables.

In business, economic analysis allows to incorporate elements from the

economic environment such as inflation, interest rates, exchange rates and GDP

growth into the corporate planning.

Every organization is an open system that impact and is impacted by the

external context. This means that a proper assessment of economic variables

facilitates the identification of opportunities and threats that could affect the

company’s performance.
 Organizations tend to carry out corporate planning processes every one or

two years and often define two or three possible economic scenarios for short

and medium terms. Then they evaluate how each scenario would affect company

decisions and achievement of goals. Economic analysis is also made when

evaluating specific projects in order to consider economic and financial feasibility.