Economic Analysis

You can decide to do something of example 1 or example 2.
Example #1: Take an issue from a recent news article related to material we cover in class. Provide detailed
economic analysis of the issues in order to describe and then evaluate the situation. I recommend the Wall
Street Journal, Businessweek, Forbes, or The Economist. This list is not comprehensive. Certainly other news
sources business and non-business alike may have something worthwhile to write about. As an example: I
might choose to write about the pricing changes made by Netflix and the resulting uproar from consumers. In
this case, I may choose to incorporate the following issues into my analysis: people respond to incentives,
optimal decisions are made on the margin, changes in market equilibrium, price elasticity of demand,
behavioral economics. My analysis might then express why economists might have been able to anticipate this
outcome based on what we assume to be true about rational decision-makers.
Example #2: Apply economic reasoning from this course to analyze a decision or activity relevant to your own
life. Provide detailed economic analysis of the issues and the supporting intuition necessary to arrive at a
recommendation for optimal behavior. As an example: suppose I were to analyze the decision of whether pay for
a haircut or to do it myself. To satisfy this assignment I may choose to discuss several of the following
concepts: opportunity cost, comparative advantage, price elasticity of demand, rationality, optimal decisions are
made on the margin, and/or responding to incentives. My analysis might then conclude with a recommendation
of when I should pay for a haircut and when I should not.

Sample Solution