How (in)elastic is your demand for gasoline?

Ok, we know that rising prices tend to cause people to buy less--the question is: how much less? Consider gasoline. We've all seen the rising (nominal) price of gasoline at the pumps over the last year or so. If the demand for gasoline slopes downward, then we should be curtailing our consumption of gasoline. Have any of you cut back on your purchases of gasoline? Have you taken fewer trips to the grocery? Are you carpooling more frequently? Have you shifted over to a more fuel efficient car? If you haven't cut back, perhaps it's because the real price of gasoline hasn't changed much over the last few years. In fact, the real (inflation-adjusted) price of gasoline has fluctuated between a narrow range over the last 20 years or so.




Most econometric studies of gasoline demand put the short run price elasticity somewhere in the range of -0.40 to -0.6, making it inelastic. Longer run estimates result in higher elasticities, suggesting that consumers are more price sensitive if given enough time to react and conserve.

UBS and Bank of China

UBS is going to purchase 500,000,000 to 1,000,000,000 dollar stock of Bank of China. They two will talk about this issue this year. The stock of Bank of China will come into market in Hongkong next year. Many banks are thinking about Bank of China's stock and will negotiate with Bank of China later this year.

This time, the first time, Bank of China coming into market plan to sell nearly four billion dollar stock. It must affect the world market a lot.

Now I am not sure whether this news is true or not. If it is true, it must affect the world market a lot.

The contrast between the system of Google and Paypal

There were some media saying that Google was working on a new system in order to compete with Paypal. The director of Google, Eric Schmidt, danied this saying in front of The Associated Pressand and said that the project which Google was working on was not the same system as Paypal.

Google is the greatest searching webpage, in contrast, Payple is about the trade-off online. They are totally different.

To some extent, both of them are get the befenit of internet. They offer the most necessary services, which most people online need. During the progess they became stonger, these two kinds of system are making benefit for more people.

Human cost behind bargain shopping

Wal-mart's slogan is : Always Low Prices. After read this article, I know the source may be biased, but I can still get a sense of how the "low Prices' come. A woman in Bangladesh works 70 hours a week with 17 cents an hour to sew pants for Wal-Mart. The pants she sew is sold $4.87 each piece in the United States. She said if ' there is 8 cents more per hours for her, she could have a decent life in Bangladesh'.
So you may think, it is the factory's problem without raising the wage. But according to the article, they asked ' Wal-mart to give them one cent more for each piece and they will help those poor people, but Wal-mart says no and saying give me 2 cents less', the other business man says' we have to meet the deadline, otherwise they (U.S.) could take the business elsewhere.'
$4.87, a pair of pants, is really really cheap. That is how Wal-mart get this cheap product to sell.

so who can tell me how much Wal mart earn by selling one pair of pants? material, labor, shipping, tax. Other money are all Wal-mart's. Huge profit.

eBay pulls Live 8 concert tickets

It is a scalper thing in the real world.
Free ticket doesn't have any value. But they can be sold on Ebay means it still has the profit for people who is selling it.

I think it is more complicated in the real world than in microeconomics. people have stuff to sell and people who want them want to lay out money. It is not wrong if we simplify it. But in a bigger context, it is wrong. So shall we simplify the situation or to explain it in the real world?

New firsts for cell phones

Asia is now broadcasting a soap opera on third generation cell phones (for people living in that area). Next month, all you have to do is open your cell phones and subscribe in order to watch a full length soap opera with all the love triangles and steamy affairs that you would normally have to watch at home. Obviously there was a demand for this for of technological advance in the Asian market, but at what cost? Obviously this will be easy to supply; however, how many people are actually demanding this? Or is this just one of those things that a cell phone service will do just in order to get respect and show that they are further ahead of their competing counterparts?

http://money.cnn.com/2005/06/14/news/international/singapore.reut/index.htm?cnn=yes

Is it worth it?

It's summertime and teens are hard at work earning some extra cash for school or for personal spending. No harm done, right? Well according to a recent CNNmoney article, some of these jobs are not worth the cost or the risk. Landscaping is the number one most dangerous job for teens while others include door to door selling of items. If these jobs are so dangeroous, then why do the teens choose them instead of working at another employer such as a grocery store? The landscaping business and other jobs owners pay a higher price for the teenagers' services. What is the real opportunity cost here? Is an extra 1.60 USD per hour worth losing your life? Many think so and as long as they do, then these jobs will continue.

P.S. The owners could lower the price of the wage tehy are paying then use that money to update and make safer their equipment.

Reaching A Living Balance

I share an appartment with a friend of mine and when it comes to costs, of course we try to split things evenly. Unfortunately, we aren't seeing eye to eye, but know the most efficent way to do this is to reach and equilibrium. Rent is 500 a month, cable and internet is 65, electric 90 and other expenses like food and toilet paper are about 100 a month. Now, I don't have a car so i use my friend's quite frequently for errands and such. He believes i should cover the total amount of rent (500) instead of half (250) as a car payment to him. He pays for gas and oil and car maintenance, then we split the rest of the living costs (cable, electric, food, etc.). Do you believe this is an efficent way of doing things? He argues that this will in turn help us reach and equilibrium because my oppertunity costs will be much less than actually making a car payment (taxes and gas) . . . or am I just being had?

Chinese Airline Company

Chinese government announced that they will cut down all the supports and limit, excpet buy planes, to Chinese Airline Company in order to make them compete with others in the world market. For example, the campany can make its own ticket price, ways, and even sell the stock to private organization, but only can not but planes.

Chinese government want to make chinese airline company have the same power with other foreign companies in the world market, so they make this decision. Considering people's safe, government does not allowed airline company to choose planes itself, but have to apply for allowance of Civil Aviation Administration of China, CAAC.

Maybe it is not the best way, but it is suiltable for CHinese airline. Anyway it is the first time Chinese government give up the control of airline companies. It is a meaningful developement in the CHinese free trade market.

Three Gorges Dam

The Three Gorges Dam is now bring to China not only margin, but also peace and safe, although it cost more than 10,000,000,000 RMB to built. It is quite difficult to duilt this dam above Yangzi River which is the third longest river in the world, 3937 miles.

Chinese government, which chose to establish this dam, faced a challenge at first. They insisted to do it at last. It is like a opportunity cost, because the money which invested in this project was huge enough to develope any other industry .

"The project's conception was monumental," says Byrne. "This was seen in the early years [of the project] as a way to show the advanced nature of Chinese society under socialism, to solve a problem that has existed in China for thousands of years... But when you're doing something on this scale, you should really make solving the problems your first priority. Unfortunately, China has decided to launch the project -- then solve the problems along the way."

The fact shows that this project is absolutely correct, although 20,000 workers have worked aroud the dam itself. Three Gorges is providing the electric power for nearly 1/3 province of China while it is preventing the flood which suppose to happen nearly every year.

China and European Union make agreement of dry goods exporting

European Union annouced that they make a greement with Chinese government about the exporting dry goods on Friday. They abolished the limit of Chinese dry goods which export to Europe and allowed it increase.

European Union allowed Chinese dry goods continue to get into the European market while they encourage their own dry goods market develope, because the society need the source but they can not product much enough.

Chinese government use the dry goods to make its economy better off and develope its other business while European Union use it to satisfy its own requirements. Both of these two side get benifit form the trade-off.

Petrol price dicrease in the time-bargain market

The petrol price decreased last Friday in the Newyouk Time-bargain Market, because the Arlene Hurricane, which happened in Mexico, dose not affect it as the National Hurricane Center alarmed. The price of petrol did not increase, but decrease.

National Hurricane Center announced that the hurricane will break the ways of transportation so that the petrol can not arrived at those places which needed it. The price of petrol will increase to the highest level.

Because the source are scarce, any thing could make the price change. The price of petrol became the most sensitive factor in the world market nowadays.

It is clear that petrol is still the best and the most useful energy nowadays. International Energy Agency announced that the number of petrol the whole world required is 84,300,000 barrel per day, and this number is still increasing in 2005.

Harrah's to buy Caesar's Palace

Harrah's Entertainment Inc. is planning to buy its cross-town rival Caesar's Entertainment Inc. Even though it is a buyout by one company of another, this reminds me of the trade issues we looked at in Chapter 2. Granted I'm only making assumptions as to actual reasons why Harrah's is obtaining Caesar's, but the article mentions that Harrah's profits slipped 2% (assumably over the last year; the article does not say exactly how long that has been). Any, to my trade point. Perhaps Harrah's sees it this way: they are good when it comes to the entertainment business; Caesar's name is recognizable throughout the world. They are now going to specialize: the former Harrah's division of the company will take care of entertainment and shows, etc. where the former Caesar's end will take care of the hotels and casino's end. That way, the two parts can focus all resources totally on what they do best.

http://money.excite.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&feed=bus&src=202§ion=news&news_id=bus-n10310725&date=20050610&alias=/alias/money/cm/nw

SBC to slash high-speed Net price

SBC decided to cut the high speed internet connection monthly fee to $14.95 per month. It is 5 dollars less than the previous plan.
I have a Charter Communication's high speed internet connection in my apartment in Marietta and it costs me about $59.99 each month. I don't have an activited telephone line in my apartment, if i want one, i have to pay 20 something and then plus this $14.95 per month which still saves me 25 bucks each month.
So i think switch to SBC's benefit is greater than the opportunity cost..(I don't know if i used the right term).

what do you think?

Planned job cuts soar 42% in May

Employers announced 82,283 job cuts in May, compared to 57,861 in April, according to a monthly report issued by Challenger, Gray & Christmas.
May job cuts rose 12 percent from the year-ago period. So far this year, 427,278 job cuts have been announced, 4.6 percent more than the five-month total of 408,392 last year, the report said.
Computer companies -- which reported 17,886 cuts, or about one-fifth of the monthly total -- led the rise in May, while the transportation industry ranked second with 7,339 announced job cuts.

I think companies cutted employees number to make themselves more efficient.
they cutted number of employees in the opportunity cost of employees' pleasant life.

people who were cutted won't have stable and consistent income anymore. but companies are better off at this time.

any point of views?

More Reasons to Hate Smokers...

First off, let me just say that I've never even tried smoking in my life. Never have - never will. I grew up in a house where both of my parents smoked (thankfully, they have long since given it up), so naturally I hated it from the get-go. They never smoked in our house, but they did outside around us and whenever we were in the car.

We all know secondhand smoke is bad for us... and it is receiving more and more attention. Many places are passing laws that ban smoking in public areas such as restaurants and bars. However, we haven't seen that in our area (yet). This is a real shame. There isn't too awful much to do in Parkersburg and Marietta compared to bigger cities--so going to eat at restaurants and going to bars are popular pasttimes among people in this area.

Nothing annoys me more than someone who smokes around others. Its not only annoying and gross, but harmful. But just how harmful is it?

According to a review by Joaquin Barnoya, MD, and colleagues that was cited in the above article, the affects of second-hand smoke (even from brief exposure) on the heart are up to 90% as large as the affects of active, chronic smoking.

"The researchers say that the effects of passive smoke are numerous and interact with each other, increasing the risk of heart disease. Here are some of the heart hazards that the review linked to secondhand smoke:
— Increased blood clotting ability
— Increased blood vessel wall abnormalities
— Higher risk of atherosclerosis (hardening of the arteries)
— Lower levels of HDL "good" cholesterol (even in children)
— More buildup of LDL "bad" cholesterol in artery walls
— Higher blood levels of markers of inflammation that are inked to heart disease and blood vessel wall plaque buildup
— Increased source of cell-damaging free radicals
— Lower levels of antioxidants, which fight free radicals

Evidence about secondhand smoke's heart dangers has been growing since the mid-1980s, say the researchers.

"Secondhand smoke increases the risk of heart disease by [about] 30 percent, accounting for at least 35,000 deaths annually in the United States," they write."

And thats just the heart.

I don't know about you all, but I can't wait to see the day when I can walk into the Townhouse and actually breathe without breathing in ash from someone else's cancer sticks. If it were up to me, I would outlaw that nasty habit and be done with it.

Comments from either side?

Airlines Look to Make Big Changes...

Three of America's largest airliners made huge headlines across the country todays.

Firstly, US Airways and America West announced today that a merger between the two (which are the 7th and 8th largest carriers in the nation, respectively) would be made in order to unite the two struggling airlines into a larger, stronger one. The new airline would operate under the title of "US Airways" still. The merger will be funded by $1.5 billion dollars in capital from a variety of new investors.

"The goal of the merger is to stitch together two geographically distinct carriers with a history of financial struggles into a stronger airline that would compete better with lower-cost rivals such as Southwest Airlines Inc. and JetBlue Airways Corp."

In the face of this news, Delta Airlines also made big news today with the announcement that it plans to cut costs by $1 billion dollars in order to achieve its goal of cutting costs by $5 billion dollars by 2006.

http://www.foxnews.com/story/0,2933,157060,00.html

"There is no area that will be safe from scrutiny," CEO Gerald Grinstein told shareholders at the struggling carrier's annual meeting.

According to John Malone, chairman of the Delta pilots union's executive committee, the pilots have done their part in reaching the goal by agreeing to a 32.5% pay cut last fall.

Delta shareholders also agreed to double the number of shares of company common stock to 900 million and reduce the par value of common stock from $1.50 to $0.01 per stock in order to give the airline greater flexibility.

In both cases, airlines are making decisions in order to keep out of bankruptcy and start churning profits in the face of rising fuel prices and competition in the low-fares market.

Welcome to the Summer edition of MariettaEcon

If you're new to blogging, just browse down the posts (and comments) made by my students this past Spring semester to get an idea of what it's all about. You are also welcome to sample some of my favorite blogs listed along the right hand side of the page.

Blogging is an opportunity for you to share your thoughts on world events with the rest of us. While normative statements are quite welcome, I would rather have you contribute positive statements that involve a bit of economic analysis. As you make your contributions, remember that you must include a hyperlink to the background material on which your posts are made.

Blogging deadline has come and gone

The deadline for blogs to count toward your grade was 9:00am April 24, 2005. You are welcome to continue blogging, but no points will be awarded for those posted after the above deadline.

Can UNC Survive

Can the UNC men's team survive losing it's top six scorers? They lost 4 to the draft and 2 to graduation. How will UNC recover from this loss. Their seventh leading scoring only averaged 3.7 points per game.
And what happened to these guys wanting to stay in school. Marvin Williams could have skipped college but he said he wanted to play college ball. He wanted to go to UNC. So much for wanting to play college ball. Yeah he played one year but he acted like he was going to stay longer.
Who will make the biggest impact? Felton, May, and Williams stock only went up these year while McCants dropped considerably. Honestly I believe Williams will be the best NBA player. There are many point guards in the NBA that can do what Felton does. May is a tweener. Not big enough for center not fast enough for power forward. McCants has the NBA attitude but he will just be average. Williams has the body like KG.
So where does this put Roy Williams and the UNC?