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Yassine G

The End Of Elastic Oil - Forbes - 1 views

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    This is a very interesting article that really helps understand this topic in depth and with real examples. Oil market is one of the largest in the world, this article talks about elasticity of demand and supply in this market. There is an explanation on the effects of different factors that determine the elasticity and what they do for this market. 
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    Although there are discovered new sources of oil (e.g. in Saudi Arabia), the suppliers have to drill deeper which is time-consuming and therefore the costs of production rise. 'In economic terms, the oil supply is becoming less elastic as new oil supplies come increasingly from unconventional oil.'
Haydn W

Taxing Carbon Is Like Taxing Diamonds | Mary Manning Cleveland - 0 views

  • Taxing Carbon Is Like Taxing Diamonds
  • To reduce carbon emissions, we must tax fossil fuels -- but, say the pundits, we can't do so because the tax would be regressive, clobbering the poor.
  • Imagine that we impose a sales tax on diamonds. Would we worry about the burden on middle-class purchasers of one-fourth-caret engagement rings? What about the part of the tax "passed back" onto the DeBeers Group? Not much sympathy for global monopolists either.
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  • Surprisingly, a carbon tax would operate much like a diamond tax, for reasons both of demand and supply.
  • Demand: The wealthy actually consume a disproportionate amount of carbon. Discussions of a carbon tax usually focus on the price of gasoline. One gallon of gas produces about 17 pounds of CO2. One metric ton is 2,204 pounds. So a $100 tax on a ton of CO2 comes to $0.77 per gallon -- a significant cost to low-income commuters and small truckers.
  • A May 2013 federal study of the Social Cost of Carbon estimated costs of additional CO2 emissions for 2010 to 2050 ranging from $27 to $221 per metric ton in 2050, depending on assumptions.
  • Demand elasticity for oil is low, about 0.5; so a 1 percent increase in oil price would cause a 0.5 percent decrease in consumption. That makes sense, since in the short run, it's hard for people to cut energy consumption, especially if they must drive to work. But, though numbers are hard to come by, elasticity of supply is much, much lower, for two reasons. First, oil production takes decades and billions in capital investment; producers cannot quickly increase or decrease supply. Second, oil producers form an international cartel, an organized mega-monopoly, which holds down production to drive up prices. Since they're already charging what the traffic will bear, they can't much raise prices to cover a tax.
  • As economists long ago figured out, buyers and sellers share a tax in inverse proportion to elasticity. Therefore, if supply elasticity of carbon is, say, 0.1, while demand elasticity is 0.5, the suppliers will pay five times as much of the tax as consumers. That reduces that $0.77 per gallon gas tax to only $0.13. Moreover, precisely because most of the tax falls on suppliers, it will generate plenty of revenue to help those unfortunate long-distance commuters and small truckers, to build more public transportation, to invest in renewable energy, and even to cut super-regressive taxes like the payroll tax.
  • According to Edward Wolff, in 2007, the top 1 percent in the U.S. owned 43 percent of non-home wealth, mostly securities, including of course energy company stocks and bonds. The top 10 percent of wealth holders owned 83 percent.
  • But the very poor don't drive or travel or occupy much space; the rich fly planes, including private jets; drive to low-density suburbs; occupy and heat multiple houses and hotels; and buy lots of stuff. Clearly the rich consume much more carbon per capita than the poor.
  • So we have good news and bad news. Good news: The cost of reducing carbon emissions will fall hardest on the 1 percent, who consume the most energy and own the energy companies. Bad news: Ditto. Expect a fight!
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    This article talks about the economic implications of imposing a tax on carbon emissions and how this would affect the different social classes of society in different ways. The article makes specific reference to economic theory and the elements on elasticity.
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    Taxation almost always decrease the economic surplus and therefore it makes a decline in effectiveness. In this case, the energy companies will be the most affected group.
Aleksi B

Cigarette taxes revenues and elasticity of demand » Bastiat's Bastions - 2 views

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    The article talks about the fact of how cigarette taxes are increasing due to the elasticity of demand
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    Very interesting article Aleksi however I believe the taxes on cigarettes are so high also because it is a product which affects the consumer's health negatively
Yassine G

BBC News - Apple, Microsoft and Adobe summoned by Australia - 1 views

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    This article talks about price discrimination. In Australia, the government things that the prices are higher than anywhere else in the world ( prices charged by foreign companies). In my opinion, this is because these major companies had the ability to discriminate, due to income, which is found to be higher and the geographical destination. It is a third degree discrimination. All the required conditions for discrimination were available. The companies have ability to set prices, as they are in an oligopoly competition. The consumers in other parts in the world are not likely to by the product and sell it to Australians. And price elasticity in Australis is found to be higher due to the higher income they have, 
Marenne M

Super Bowl XLVIII Pricing: A Lesson In Demand Elasticity - Forbes - 1 views

  • club-level seats in the mezzanine of MetLife Stadium are likely to cost about $2,600, as compared to the $1,250 charged for the top tickets at last year’s Super Bowl in New Orleans.
  • next-cheapest set of tickets in the lower bowl of MetLife would cost about $1,500, up from the $950 charged for second-tier seats sold in New Orleans.
  • professional sports teams typically price their inventory in the inelastic portion of their demand functions.
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  • eams charge too low a price to maximize ticket revenues
  • maximum attendance
  • omplementary purchases associated with sporting attendance…such as concessions, parking, merchandise.
  • maximizing ‘revenue per seat’ as opposed to just gate revenues
  • onsiderable mark-ups for Super Bowl tickets
  • willingness to spend thousands of dollars above face in some cases merely reflects the uniqueness of the event
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    The author describes inelastic demand taking the Super Bowl as an example of pricing in many other sports.
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    This article describes how many sports events try to keep their prices low, in order to maximize attendance and thereby complementary costs such as food and parking. However, the Superbowl tickets are very expensive, and increasing in price. This is because they want to earn more money purely on ticket sales, and they believe they can make more revenue because the high prices only show how special this event is, which means there is a high demand to meet the high prices.
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    This article describes how many sports events try to keep their prices low, in order to maximize attendance and thereby complementary costs such as food and parking. However, the Superbowl tickets are very expensive, and increasing in price. This is because they want to earn more money purely on ticket sales, and they believe they can make more revenue because the high prices only show how special this event is, which means there is a high demand to meet the high prices.
Talisha R

Apple's Ipad Mini - 2 views

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    This article shows how when the prices of luxury goods decrease, the demand increases. Usually, Apple's products are quite expensive, but by decreasing the price, it attracts more consumers which shows that their product is price elastic. When there is a change in price, this causes a significant change in demand as shown in this article.
Zuzanna G

PED of gasoline - 1 views

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    Gasoline has a very inelastic demand. It became an essential product because it is used to produce energy, to use cars and for so many other functions. This article discusses if the elasticity of gasoline may is zero or not. Even the fact they are discussing it means that gasoline is essential because if its elasticity is considered to be zero or a little more it shows how important the product is and how muche the price of the product doesn't affect significantly the demand for it.
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    This article smoothly discusses the PED of gasoline. It's worth reading because it examines it clearly and quite precisely - e.g. taking into consideration time. It shows that gas is an inelastic good, due to the fact that it's really necessary and commonly used. This text ends with a nice conclusion stating that one's never fully sure about the changes in economy.
John B

Biz/ed - Price Elasticity | Biz/ed - 0 views

  • Oil plays a big part in its energy costs - energy accounts for around 30 - 40% of its refining costs and with oil prices having risen it has had a big impact on the company.
  • they are in a competitive market and it is likely that if they increased their prices, people would look elsewhere at rivals products or they would simply put off purchasing the items until a later stage.
  • Recent econometric research into the price elasticity of demand for sugar suggests that it is nearly zero
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    This article is about how the rising oil prices affect the companies that produce sugar. The article tells us that sugar is inelastic because of many factors, for example very few substitutes so by rising the prices of sugar in the market, it does not really affect the demand for it.
Amanda Anna G

Obama: No 'sugarcoating' problems with health website - CNN.com - 0 views

  • Washington (CNN) -- An unscripted moment Monday summed up President Barack Obama's effort to downplay problems plaguing the government website used to sign up for required health insurance under his signature health care reforms.
  • In the same assured and upbeat manner, Obama also attempted to discuss the myriad problems of HealthCare.gov, the website for the 15% of Americans lacking health coverage to sign up for insurance.
  • "It's time for folks to stop rooting for its failure, because hardworking middle class families are rooting for its success," Obama said of the health care law.
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  • "God only knows how much money they've spent, and it's a failure," McConnell said Sunday on the CBS program "Face the Nation." "You know, the government simply isn't going to be able to get this job done correctly."
  • Carney hinted that lingering problems in signing people up could result in relief, noting that the law makes clear that "if you do not have access to affordable health insurance, you will not have to pay a penalty for not having affordable health insurance."
  • He also repeated the President's assertion that high demand in the first weeks of the new exchanges contributed to the website problems, noting that the larger-than-expected response exposed existing "glitches and kinks."
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    This is a question about price elasticity, since something needs to be improved in the quality of the website so there will not be problems anymore, often resulting in a necessary price change. Since health insurance is seemed as necessary for many and hence the responsiveness is big, the demand might not change as much in a change in price of the website even tough there are problems at the website. If there will not be an improvement of the website and the price will increase, there might be a smaller change in the quantity demanded.
Fiete M

Rajan Needs Help From Delhi in Inflation Fight - 0 views

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    This article shows how elastic Indias currency the Rupie is, and how a small increase in interest rate can cause a huge increase in inflation
Dina B

Apple iPhone - 2 views

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    This article talks about how the iPhone 5C is doing. It seems that it isn;t doing to well, however this might not be the case. It talks about how apple could lower the price of the phone to make more people want it, however, they don't seem to need to take those steps. (This refers to price elasticity).
Daniel B

Which oil & gas stocks to buy in volatile environment - 0 views

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    This article shows the best possible market where inelastic demand is common. The oil and gas are the products that have the price elasticity of demand below the one. It is caused by the cooperation of the industries and miners as well as it is really hard to find such a good substitutes for it.
Pietro AA

Origin says solar and storage coming quicker than thought - 0 views

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    This is an interesting artice that shows how solar phtovoltaic is taking over, reducing the demand of substitute sources of energy but mostly, increasing their elasticity. With PV on the market, more people will be ready to abandon coal or oil for this clean and durable energy source.
fie dahl

Western fires sap forestry budgets - 0 views

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    I choose this article because it tells about what external impacts (nature) can have on a budget. It's not directly talking about price elasticity, but more about how another "product" (the wildfire) can steel the revenue (money spend) from the other "product" (keeping the nature heathy). I think that this dilemma can apply to other thing like normal products.
Sebastian G

Weak chicken price affects Industrias Bachoco results - 1 views

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    This article shows how a small change in demand, effect the sales and the profit of a buisness due to lower chicken prices.
Daniel B

Fuel subsidies in Indonesia Unpriming the pump - 0 views

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    this article shows use of instruments that are in the hands of government. government in Indonesia imposed excise on petrol which is very common example of good with inelastic price elasticity of demand. The possible reason is that petrol is essential good. moreover, they want to use money gained from higher excise to give subsidies for the poorer households.
Zuzanna G

How can America pay for its roads? - 1 views

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    This is an article that appeared lately in The Economist. It considers gas taxation in order to fund roads. It gives the factor that we discussed during classes: substitutes to gasoline, PED, the influence on the environment.
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