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This article talks about how the Americans are copping with the increase in gasoline to 3.50$ a galon. It states that all around America in New York for example, where nearly everyone uses public transport, the public transport has increase by 5. Even in the south west where driving is strongest public transport has reached its maximim capacity during rush hours. It also states that the US in having problems with upgrading and even sustaining public transport as faires only cover 1/3 of the cost and rely on government funding. the article also says that most americans are now buying smaller cars and driving less agressively to save fuel. So what this article is telling us is that the American economy is using the XED principle where the price of petrol has risen and therefore the demand for it has dropped, even thought its very inelastic, and the demand for public transport has risem.

This article relates directly to the concept of income elasticity of demand and cross elasticity of demand . McDonald's monthly sales fall for the first time in almost 10 years. Its revenue fell by 1.8% last month. This happens because of the various reasons. One results from the unstable economy. People are more cautious about spending their money. A lot of people choose to "eat in", simply because they cannot afford it. This applies a lot to the younger consumers, who have been facing unemployment. The company has also been affected by Europe's economy since the market of Europe counts for 40% of the company's revenue. European economy has been facing recession. There has been a tremendous amount of unemployment, which means a decrease in the general population's income. This directly relates to income elasticity of demand. As income falls, the quantity demanded for products fall as well. In this case, people choose to eat at home to be more frugal. I believe this contradicts a little to the idea of inferior goods. McDonald's may be considered as "inferior goods" to the majority. It is often said that as income decreases, inferior goods will likely benefit from it. However, in this case, McDonald's do not. People choose other alternatives instead, which is eating in. So it is just not McDonald's that has been affected, but a lot of other restaurants and fast food chains too. Furthermore, fierce rivals have also came up with strategies to out compete its competitors. For example, Wendy's Co. has decided to upgrade their menus and offer discounts. This relates to cross elasticity of demand. Obviously, as other rivals offer discounts and as well as an upgrade on their menus, consumers will shift to consuming those products that are slightly cheaper.

Samsung and Apple are the most popular companies producing highly desired products, but it seems that Samsung has took the lead. The cross elasticity value of each respective smartphone is high and positive, making them close substitutes for one another. With the high cross elasticity value, the sales for each product is sensitive to one another, making the market fierce.

This article is very interesting, Andy. I find it amazing how blackberry has almost completely dropped off the face of this planet! Its all about samsung and apple now. Since the Iphone 5 came out, I am guessing that the demand for Samsung phones has dropped!