Economic Analysis

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---
name: Economic Analysis
description: Apply microeconomic frameworks to reason through business problems.
---

# Economic Analysis

Use microeconomic reasoning to analyze pricing, competition, and market behavior. The
goal is to make the underlying incentives and trade-offs explicit.

## 1. Frame the problem economically
Identify the actors (buyers, sellers, regulators), the good or service, the market
structure (competitive, monopolistic, oligopoly), and the decision being made.

## 2. Supply and demand
- Sketch what drives demand (preferences, income, substitutes, complements) and supply
  (input costs, technology, number of sellers).
- Identify the equilibrium and what shifts each curve.
- Distinguish a movement along a curve (price change) from a shift of the curve (a
  determinant change). Conflating these is the most common error.

## 3. Elasticity
- Estimate price elasticity of demand: are buyers sensitive to price?
  Inelastic (necessities, few substitutes) → raising price raises revenue.
  Elastic (luxuries, many substitutes) → raising price lowers revenue.… install to load the full skill