IB Economics SL Heitmann

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.

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.

(If that does happen, those...) In a chat with ET Now, Hemindra Hazari, Market Expert, shares his views on markets. Excerpts: ET Now: What could lift off the market, do you think it would have to be a bullish market friendly budget and would we be foolish to even expect that at the current juncture?

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.

The left wing want to do "a Greece" to get back on track. They refuse to conform with the austrity demands of the EU, and want to get the country back on track by national measures, like reversing privatization. The political instability leads to lower investment and Portugal is warned that it might risk going the way Greece did.

The political instability in Russia has not affected its bank rates. The Romanian central bank has not changes its main interest rate despite of the resigning of the government. The banks interest rate will stay at 1.75% and many believe that it will be able to survive the political instability in the country. Romania is the EU's second-poorest nation and the political situation could possible affect assets prices and delay making monetary policy in the country. The economy Romanian central bank keeping its intre

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

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, published by the Wall Street Journal on October 28, 2015, describes cash injections into the economy by the government sector. The article explores what U.S. economic growth could have been like if the U.S. government hadn't cut spending in the economy. The author wagers that if spending had continued, the U.S. economy could have grown more significantly than it has.

This article although an opinion piece is made up of many subtitles, the one I chose to focus on is Roosting chickens and Fed Bashing, It talks about how Druckenmiller keeps predicting economic dooms due to rising interest rates since he closed his business. Personally I feel this is like the quote we got that says, "looking at statistics...to save himself from having ignorance foisted on him", this article is about Krugman using his on look on statistics to see if Druckenmiller's predictions are accurate since some can say they were and others can say they weren't. Krugman gathers his knowledge from past experiences with 2008 crash and The Great Depression; with my own knowledge of the Great Depression and things that contributed to it's solution this drives me to say that government intervention and spending are what's needed to fluctuate the economy ( hence why people argue WWII was the real solution to the Depression due to it's massive spending).

In this article, the downfall of the rupee is being discussed, with some information of the opinion that the Governor of the Central Bank of India has on this situation. Multiple examples of governmental actions are displayed in what has already been done by India in an attempt to cushion the downfall, including making cuts on interests four times.

One of the main things we talked about or that stood out to me was how the income of the indivisible affected demand of a good and it seems we all came to a consensus that luxury goods are most affected by changes in income. In the article a BMW car company speaks out it's total revenue has been decreasing as the economy is slowing down . Over the past 5 years China has been experiencing periods of economic downturn and car sales were declining drastically people were even canceling orders, however, increased government action led to a period of economic growth in the third year which increased sales by 4% or so. But things slowed down again this year and Song ( an owner of the company ) talked about how he had to cut prices even further from 4%- 20% just to increase consumer demand even though it only made a slight difference because people's income have decreased they can't spend as much money as they used to on luxury products such as BMW cars or multiple cars, they are now focused on saving money.

I agree that the demand for luxury cars has declined as a result of decreased economic growth in China. Shares of some luxury car companies have dropped by more than 30% in the last year while shares of an inexpensive compact car manufacturer have increased more than 20%. The demand for luxury cars is very elastic. These cars are a luxury, not a necessity. Luxury goods take up a relatively large proportion of income and are used over a long period of time. There are a relatively high number of substitutes for luxury goods. In China, customers are choosing to purchase inexpensive cars rather than luxury vehicles in order to save money.

The Russian recession has caused sales for luxury goods to drop. Many companies that sell luxury or tourism goods have seen the demand for their product significantly decrease since the recession. This is because these products have a negative income elasticity so as income decreases so does the demand for these products. The demand for tour groups and hotels has also decreased because of the recession. Since all of theses products have a negative elasticity once the income of the buyers in Russia decreases then so will the demand for them.

This article discusses the impact of the Russian recession on demand for luxury goods. The recession has decreased the income and spending power of many Russians which has resulted in a decrease in a demand for luxury goods (clothing, jewelry, etc.) and services (airfare, hotels, etc.). The demand for luxury goods is very elastic. This is because luxury goods are not necessities and consumers can survive without them. These goods often have a reasonable number of substitutes. They also require a relatively high proportion of income to be spend on them and are used over a long period of time. The Russian recession has impacted firms across the globe but especially in Europe where Russian consumers account for a large percentage of customers.

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.

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

America has been using nuclear power for electricity. Nuclear power is a cheap reliable source of energy that America has been using for many years. Nuclear power accounted for about 20% of US electricity production. Now many nuclear power plants have been shutting down because of the negative externalities that comes with it. Nuclear power plants have a lot of waste and hurt the environment. Nuclear power plants are also sometimes associated with nuclear weapons. The US is losing interest in nuclear power plants because of the negative externalities that comes with it.

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.

This article, published by The Atlantic on 09/25/2015, describes China's participation in the cap-and-trade Carbon Credits system designed to limit global carbon emissions. Beginning in 2017, China will have a maximum level of carbon emissions that it is allowed to produce, and will be forced to pay for exceeding it.

The return of the haze to Singapore has brought the predictable round of complaints, analysis, hand-wringing, and soul-searching, but the problem never seems to improve. To establish a basis for actionable intervention, it is critical to link policy solutions with evidence about the health impacts of the haze-on residents of Indonesia.

With the lower prices less oil production falls. The lower prices also leads to less capital into the market and smaller companies with loans will struggle to pay back due to less revenue and profit. Some may have to declare bankruptcy. It is almost impossible to increase prices, because then other firms will offer cheaper oil and win your customers. The PED of oil is close to infinity and the XED between the oil of two different companies are a very high positive value