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New Invest Sign Economic analysis tips

InvestSign added two articles to expand knowledge about Economic analysis. The short abstracts are listed below:

General Types of Economic Analysis

The term economic analysis is a broad one. It encompasses a spectrum of topics including economy wide analysis, regional studies, market structure investigations, and analysis of specific decisions. It is this last topic, as applied to investment, regulatory and certain grant award decisions that are the topic of this article. Such applications usually concern the addition or subtraction of a particular investment or regulation to the existing system or body of regulations--denoted as marginal or incremental analysis. For the most part, the methodology outlined is also applicable to the evaluation of a system in total or a body of regulations.

Economic analysis of investment and regulatory decisions seeks to provide answers to two economic questions: (1) is a particular objective worth achieving, and (2) which of several alternative methods of achieving an objective is best? Two general procedures are employed to answer the questions.

The first, cost effectiveness analysis, assumes that the first economic question has been answered in the affirmative and concentrates on providing an answer to the second question of which alternative is best.

The second, benefit-cost analysis, seeks to answer both questions. While benefit-cost analysis is more complete than cost-effectiveness analysis, studies are often limited to the latter because of an inability to measure benefits in euro.

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Economic Analysis Process

The economic analysis process consists of eigth steps:

1. Define the Objective

2. Specify Assumptions and Identify Alternatives

3. Estimate Benefits and Costs

4. Describe Intangibles

5. Compare Benefits and Costs and Rank Alternatives

6. Evaluate Variability of Benefit-Cost Estimates

7. Evaluate Distributional Impacts

8. Make Recommendations

The analytical considerations involved in each of these steps are described as follows.

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