Group items tagged

The exposure to second hand smoke during childhood destroyes their arteries and can lead to heart and lung damage . This smoking in parents causes lung cancer and premature death fron conditions such as heart strikes and high blood pressure. It is recommended that these parents stop smoking in order to help make the future of their children better. This consumption of cigarettes causes a negative externality as the children are affected in the near future from second hand smoke. These children whose parents smoke are more likely to smoke as well which continues the cycle of negative externalities of the co sumption of cigarettes.

This is a perfect example of negative externality of consumption. By smoking in public places, the consumer is creating negative externalities, in the form of passive smoking, for non-smokers especially children. When individuals smoke cigarettes, they are compromising their own health as well as the health of those around them who inhale the smoke. I agree with the point that another external cost can be younger children being influenced to smoke following the habits of their smoking parents. This is why cigarettes are considered as demerit goods as they cause significant negative externalities , and these are the goods that the government would like to limit consumption. Individuals may not be aware of the external costs arising from the consumption of the good because of lack of information or myopic behaviour. For the article mentioned above , it is crucial for the state to take on a paternalistic role and curtail consumption

Raise in market price of soda in Chicago is discussed. Will it result in an increase in revenue and reduction in consumption? The PED suggests so. A similar policy was introduced in Mexico, and the soda there had a PED of 0,6, making it inelastic. Will the same happen in Chicago? Demand, elasticity and the PED are discussed in this article.

How exactly has this affected the elasticity? You should elaborate on price and its relation to demand and the PED. I agree that the raise in price would increase revenue and reduce consumption. However you contradict your previous point by stating that soda will become inelastic. I don't agree with you because soda is not a necessity and it is not healthy so if there is a raise in price and PED which will cause demand to decrease meaning it is elastic.

An externality occurs when the production or consumption of a product has an effect on a third party. Although the externality that is generated can be positive, the externalities of consumption generated by smoking are all negative, and this is one of the biggest examples of a negative externality of consumption. Passive smoking poses external costs to third parties in this case children where no appropriate compensation is made.

This article looks at the Elasticity of Demand and Supply for oil. The increased costs of the production and higher prices are not leading to a fall in demand, but instead a fall in the elasticity of demand.

This article fits in my opinion very well to the topic of elasticities. It deals with price elasticity of both supply and demand for oil. The author is concerned with the increasing inelasticity of supply: "reserves we're now exploiting are not only more expensive to develop, but they also take much longer between the time the first well is drilled and the when the first oil is produced". There's also a graph in the article which shows the constant fluctuations of both supply and demand for oil, and how the American oil supply struggles to adjust itself to American demand for oil.

This article addresses the changes that have occurred in the oil market over the past ten years. The author claims that changes in the demand of oil have increasingly been playing a role in maintaining the supply/demand balance. He argues that these changes will be burdensome to our economy unless the demand for oil is made more flexible. According to the article, there is not a shortage of oil. Today, due to rising oil prices, we are able to exploit oil reserves which were previously too expensive to exploit. Since these new oil reserves are more expensive to develop and take longer to access, the time it takes for oil supply to respond to changes in price is increasing as well. This means that "...the oil is becoming less elastic..." meaning that "a large change in price produces a small change in supply." In regards to the elasticity of demand, "the elasticity of oil reflects the options we have to using oil for our daily needs." Our ability to reduce oil consumption is fairly limited in the short term, but increases over the long term. However options for reducing oil consumption over any time period are often inconvenient. Reductions in demand due to high prices can be called demand destruction (a permanent move down the demand curve toward reduced demand) which can be detrimental to the economy. This is why people such as the media and politicians wish to have supply adapt to changes in demand instead. However, "there are also limits to the ability of oil supply to adjust." Oil is not easily accessible. Because oil supply has become less elastic, prices has had to become more volatile to force market adjustments. The author concludes by suggesting ways that the elasticity of oil demand can be increased and the pain of demand destruction decreased.

Consumers are upbeat about the economy and their future income prospects, according to the University of Michigan's latest survey. The preliminary headline consumer sentiment index for November was 93.1. Economists had estimated a rise to 91.5 from 90, according to Bloomberg. This increase is likely to become evident in higher consumption, which will shift the AD curve right, thus increasing short term aggregate supply.

The article describes the situation for Azerbaijan, where its currency, manats, have depreciated against the American dollar greatly. The banks have imposed limits to consumption of foreign, in order to limit the imports.

Market failure in the fuel market led to government intervention, in order to decrease the consumption of fossil fuels. The marginal social benefit would hopefully be reached by this, but the government intervention did not go as planned. Supporting certain biofuel producers caused a decrease in production of other biofuels, resulting in little change in the fuel market after all.

Christian Wienberg illustrates how expansions and contractions have an effect on the global economy. Recently there has been a contraction, illustrated by the decrease in consumption, thus production and trade. The business cycle would suggest a recovery soon, because of lowered inflation or even deflation.

To battle China's decreasing economy government has decided to increase it's tourism sector hoping the increased revenue can help the economy as well as boost domestic spending. If society itself does not spend how is it expected to generate profit. However in order to make sure tourists know of the new sector they are creating advertisement would have to be paid for or else there could rise the possibility of a market failure that occurs with positive externality of production

This article describes how the events in Paris affected the economic growth. This illustrates how more factors than taxes and employment can make a difference in level of economic activity. A decrease economic activity might cause the government to intervene by reducing the interest rate, creating incentives to increase consumption. A demand-side policy like this could help the economy get back on its course.

A thriving black market has cropped up after the NSW prisons smoking ban On the black market cigarettes can cost $300, up from $28 before the ban Prison sources claim that 'an inmate fight broke out over cigarette butts' The ban on smoking in NSW prisons has reportedly led to a thriving black market, where a packet of cigarettes can go for as much as $300, while matches and papers can fetch a staggering $90.

This article has to be about the negative externalities of consumption, as it involves smoking. It affects not only the ones smoking but the others as well. Banning it in a prison can help in bringing the MSC equal to MSB. This also wont affect the tobacco industry as there is still comsumption taking place outside the prison. Banning it has a negative step, which is the creation of the black market. Prisoners are even fighting for cigarrete butts. The government / the prison authority should take a step in taking the ban away and but also making it difficult to obtain cigarettes, to avoid such brawls.

I agree that the negative externality involves non-smokers in the prison getting affected. You suggest that the ban should be taken away, wouldn't this still lead to more people smoking and causing even more second hand smoke to affect the non-smokers? This wouldn't help the situation I believe it would make it worse instead.

this article look at the economic growth and what caused it in Switzerland. It also explains what the increase in economic growth implies for Switzerland.

The price of coffee has been going up and will keep at it but this doesn't seem to affect demand as demand is still increasing. Now quality is not affected by price. These can be based on the fact that the product is addictive and not many substitutes will suffice. Some even think of it as a ritual every morning.

I agree that coffee is inelastic because it is typically contains caffeine which is an addictive drug. People are addicted to coffee and depend on it as part of their daily lives. They cannot function without it, or are at least unwilling to. Therefore, consumers will continue to purchase coffee despite rising prices. Coffee drinkers also enjoy the last of coffee and are not willing to switch to other caffeine filled drinks such as tea or soda because they are not close enough substitutes. In fact, coffee consumption has actually increased despite rising prices. Consumers will not change their tastes unless prices become drastically higher.

i agree with the point that the change in qunatity demanded is not very significant. This is due to the fact the coffee is a habit forming good and addictive to most coffee addicts. However it also depends on the proportion of income spent on the good. Coffee prices can range from being dirt cheap at hawker centres to expensive at cafes like Starbucks. Hence even if the consumer is not a coffee addict, and only a small proportion of income ( if it is 'insignificant' ) is spent on the good, then a change in price will not affect the spending behaviour ; demand is price inelasic

This article discusses the problems with China's economy and what needs to be done to resolve these issues. In China economics and politics are very closely tied. This is due to the fact that China's authoritarian leaders are largely in charge of the economy and must deliver economic prosperity in order to stay in power. However, industrial production has fallen, fixed-asset investment and retail spending has slowed, and home sales have plummeted. This has caused concern among Chinese leaders. While there was once a consensus in the West that authoritarian politics were beneficial for the Chinese economy, this is becoming increasing questioned. For the past several years, the aim has been to "rebalance" the Chinese economy by avoiding over reliance in fixed investment and imports as well as greater reliance on domestic consumption to drive GDP growth.

This article, published in the New York Post on November 15, 2015, describes the ongoing debate in the United States about raising the minimum wage. Some believe that a raise in the minimum wage would result in greater aggregate demand, as consumers would have more money to spend. However, this article argues that raising the minimum wage would result in a loss of jobs, hurting production and overall consumption.