Economics HL - Jacob Solomon's group - Year 1

In India, silver is in high demand during the festive season of Diwali. This article discusses how in the case, the demand for silver is relatively inelastic, because the demand has stayed relatively the same while the price has increased around 30%. Since silver in sweets is a tradition, most people will continue to purchase edible silver leafs for Diwali even when the price increases, and so the demand for silver leafs is inelastic at this time of year, but when the festival is over, the demand will once again go down and become more elastic.

Aug 8th 2011, 14:29 by R.A. | WASHINGTON TODAY'S biggest news is the word that the European Central Bank is intervening in European debt markets in force, buying up Spanish- and Italian-government debt. The ECB spent last week expressing reluctance to take this step, but without it, the euro crisis threatened to spin irretrievably out of control.

This article concerns the increased taxes being imposed upon alcohol in Sri Lanka. The reason for this is because alcohol is viewed by many as a 'necessity', and is also addictive (which makes it a necessity). This makes alcohol a product with inelastic demand; as an increase in price will result with a proportionally smaller decrease in demand. This avoids chances of unemployment by increasing the product's price, and is therefore a reason for the increase in the imposed tax upon it.

The China Business news reports about the increasing gold prices of China. The elasticity of the product is going to be incredibly low and inelastic because gold is so unique. Of course there are faux-gold substitues, however gold is the real deal. Having a shortage of gold, combined with economic uncertainty, means that the #3 gold producer's prices may continue to change.

This articles talks about how the export growth of 2.4 percent in September has created growth in overseas shipments because as the yen is getting stronger Japanese products are getting more expensive in overseas markets compared to Asian rivals such as China and South Korea. Due to the fact that the products has increased in price the demand for them has risen because people think that they are worth more, however the supply has decreased due to the increase in demand.

The article is mainly about the fuel oil price and it's relation with Malaysia's oil market. It questions the demand and supply aspect of the determinants of the price of oil and talks about suggestions through an indirect perspective.

The rationing function ( a specific aspect in price mechanism) Prices serve to ration scarce resources when demand in a market outstrips supply. When there is a shortage of a product, the price is bid up - leaving only those with sufficient willingness and ability to pay with the effective demand necessary to purchase the product. In this case this countries are finidng a suitable way to solve the issues regarding issues concerning gas...

This shows price elasticity, because despite the fact house prices keep rising, people keep buying them for eleven straight months.

This article may or may not actually affect any of you, but it was interesting nonetheless. Kimberly-Clark, the company that produced Huggies diapers (among other things) is being forced to raise their prices because of higher oil costs and "tight supply driven by strong demand in China". The entire article talks about whether or not people are willing to pay more for their products, which would in turn indicate their inelasticity (as hinted at in the first paragraph).

This article talks about new Delhi, and how the Prime minister believes that they can no longer go on subsidising the oil companies for lower prices to customers as it has become unsustainable. It also talks about the potential consequences of the actions in New Delhi should such acts continue and how New Delhi is now in a potentially worrying economic position

This article talks of how, in recent years, governments have given more support in agriculture than they used to. However, in the last year the support has decreased. This may be because there are many economy's that have been suffering recently.

This article discusses how the government is trying to deal with the greenhouse gasses that are having a negative impact on our environment. The governent is taking steps to promote the use of biofuel over ethonol by using tax subsidies....

Who likes cheese? In Canada we do, and it's not helpful that our dairy prices are so much higher than other countries. This article analyzes our situation compared to other countries, particularly the United States. It also brings up the idea of other countries imposing subsidies to pay out farmers to help the problem (ie. US farmers get 31 cents per litre of milk). As well, Canadian farmers get a quota to how much product they can produce, so that really restricts competition in this industry.

http://www.bbc.co.uk/news/business-15701101 I think a better way would be to implement a rationing system. However, this would cost far too much money and will never happen. The end result being that those laying claims on being missold PPI- "No tax is generally due on the repayment element of compensation paid to those missold PPI. However, the additional interest is taxable - in line with other compensation claims." but the "taxman" (the government) gets to pocket lots of tax revenue.

This article describes the vast amounts of subsidies that are available to companies providing renewable energy sources in the United States. The government decided to provide subsidies for these projects because it felt that they were necessary for the environmental health of the country, however some people believe that the government provided too much unnecessary money in this situation.

This article discusses the excise taxes in Hawaii and how the revenues have risen over 8 percent in recent times! Although the article did not describe exactly why this has occurred, however the most accurate predictions would that the increase in revenue would be due to increased taxes on inelastic items, for example, gasoline, etc. This not only ensures that the demand is unchanged, but also ensures that all other factors stay the same. Another reason why the revenues have increased could be that the taxes did not increase, however the population grew.

This article illustrates an important aspect of taxing that we looked at in the past few weeks, and are looking at this week as well. The government increases taxes on inelastic products (such as tobacco and alcohol- which are addictive and therefore necessities). This is done as with a price increase on an inleastic product, the demand decreases by a proportionally smaller amount. This decreases any potential danger for high levels of unemployment on behalf of the company's supplying the products.

A tad early, but Christmas music will be coming on the radio next week! At least here in DC.. The article outlines a government plan to make a little extra revenue, and how that plan was so fiercely opposed. The tax would be imposed on the producers, given that they produce more than 500 trees a year, and in turn the producers would probably have to increase their prices. Since it is a specific tax with a fixed amount of $0.15 (not dependent on the price of the trees) it will shift the supply curve up. Even though the article states that the program "wouldn't have any impact on the final price consumers pay for their Christmas tree" - there would be an inevitable small impact at least in one retail area of the trees. Since there are so many consumers that will want Christmas trees, a tax would bring in a fair amount of money, as there are no substitutes for Christmas trees.

This article concerns the industry of solar panels. Last year, demand for solar panels doubled in countries such as Germany and Italy. This was in response to the increase in supply. Last year, the average price of a solar panel halved due to advanced technology (a ceteris paribus factor of supply). This decreased the costs of production of solar panels, shifting the supply curve to the right. In response to the low prices, demand also increased. This demonstrates the price mechanism.