Answer to Question #126253 in Microeconomics for Amore

Question

What do you understand by the concept What if Analysis and where can it be used?

Answer 1

What if analysis is a concept where an individual considers different scenarios in order to determine a wide range of outcomes. What if analysis enables an organization to make the most informed decisions for a given resource. This analysis may be used in determination of the level of labor and materials to be allocated to different departments for to enhance optimal level of production. For instance, a firm may realize if it hires 56 laborers the production level is 1000 units but when the number of workers is increased to 80 the level of production decreases to 879 units which could be caused by crowding effect.