Economic feasibility refers to the ability of a project or business venture to generate enough revenue to

cover its costs and provide a reasonable return on investment. It involves analyzing the costs and
benefits of a project, including the costs of materials, labor, and equipment, as well as the projected
revenue from sales or other sources of income. Economic feasibility is an important consideration when
determining whether a project or venture should be undertaken, and it is often used in conjunction with
other types of feasibility analysis, such as technical feasibility and operational feasibility.

Example of economic feasibility

An example of an economic feasibility assessment would be a company considering launching a new

product line. The company would conduct an analysis to determine the costs of developing and
producing the new products, as well as the projected revenue from sales. They would also consider
factors such as the size of the market for the new products, the level of competition, and the target
audience.

The company would use this information to make a decision about whether to launch the new product
line. They would evaluate the costs of the project and compare them to the projected revenue to
determine whether the project is economically feasible. They would also consider other factors such as
the potential risks and challenges, the overall market conditions, and the company's ability to launch the
new product line.

If the company determines that the new product line is economically feasible, they would proceed with
the launch. However, if the analysis indicates that the project is not economically feasible, the company
would likely decide not to proceed with the launch.

This example is a simplified one, In real-world scenarios, it would involve more detailed analysis and
considerations, but it illustrates the main concept of economic feasibility assessment, which is
evaluating the costs and benefits of a project or venture to determine whether it is economically viable.

Elements of economic feasibility assessment

Economic feasibility is a kind of cost-benefit analysis of the examined project, which assesses whether it
is possible to implement it. This term means the assessment and analysis of a project's potential to
support the decision-making process by objectively and rationally identifying its strengths, weaknesses,
opportunities and risks associated with it, the resources that will be needed to implement the project,
and an assessment of its chances of success. It consists of market analysis, economic analysis, technical
and strategic analysis.

Market analysis

Market analysis plays an important role in the evaluation of economic feasibility of a project or business
venture. It involves gathering and analyzing data about the market in which the project or venture will
operate, including information about the size and growth of the market, the current and projected
demand for the product or service, the competitive landscape, and the target audience.

This information can be used to make more informed decisions about the project or venture, including
decisions about pricing, marketing, and distribution. For example, a market analysis might reveal that
there is high demand for a particular product or service, which would make it more economically
feasible to launch the project or venture. Similarly, a market analysis might reveal that there is a large
and growing market for a product or service, which would make it more likely that the project or
venture would generate enough revenue to cover its costs and provide a reasonable return on
investment.

Market analysis also helps to identify potential risks and challenges that may impact the economic
feasibility of a project or venture, such as intense competition, regulatory changes, or changes in
consumer behavior. By identifying these risks and challenges early on, decision-makers can take steps to
mitigate them, thereby increasing the chances of success for the project or venture.

In summary, market analysis is an essential tool for evaluating the economic feasibility of a project or
business venture as it provides a comprehensive understanding of the market behavior and trends,
enabling to make rational decisions, and assessing potential risks and opportunities.

Economic analysis

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Economic analysis is a method of studying economic processes, which consists in considering the
relationships between the various elements of these processes.
It can be used both to study economic phenomena and processes occurring on a scale of the whole
economy (macroeconomic analysis), as well as phenomena and processes occurring within particular
economic units and institutions (microeconomic analysis). Economic analysis makes it possible to make
diagnoses, facilitates decision making, as well as facilitates rationalization of economic processes, both
on a macro- and microeconomic scale. In economic analysis, mathematical methods are widely applied
(e.g. marginal calculus and linear programming). Analysis is a way of scientific procedure, ordering and
dividing the whole into components. The aim of the analysis is to examine the structure of the whole, to
get to know the mechanism of connections between the components.

Activities related to the assessment of the company's activity are the subject of economic analysis. In
the conditions of changing environment, technological and scientific development, making decisions
concerning enterprise management requires fast and reliable information. Therefore, economic analysis
and the financial analysis included in it have become particularly important. The economic analysis
covers all economic phenomena occurring within the company and in its surroundings. Investigating
factors involves dividing economic phenomena and processes into constituent elements, determining
the causal-impact relationship between the elements, and drawing conclusions from the assessment.