Raising Awareness

Ms.Midori Nishizawa, the Canadian Academy middle school Japanese teacher, has always been an enthusiast for saving the planet. She is the founder of the Middle School Eco Club, and also initiated the movement to start a High School Eco Club. Ms.Nishizawa proposed an “Earth Week”, one in which we perform tasks (or rather, refrain to perform certain tasks) to help save the environment.
Today is the “no print day”. Students are banned from using printers or copy machines and therefore are discouraged from using paper. In economic terms, this is a ban. By banning the use of printers, we are preventing the negative externalities that arise from the use of paper and electricity. However, the true purpose of this day is not the ban itself, but the awareness of the cause. Banning one day’s worth of printing paper is not a very big deal, but Ms.Nishizawa hopes that this day will act as a creative advertisement for the cause of saving paper and electricity.

Volcano changing Airline policies

“A passenger group has expressed “outrage” that some travellers may face extra charges for flights they rebook due to the ash cloud.
It said it had found evidence of some airline websites saying passengers must pay the difference between the cost of an original and rebooked flight.
The Air Transport Users Council (ATUC) said rules state passengers who chose a new flight should not pay extra.
However, people could face higher prices if they rebooked themselves.
Regulations
EU rules state that European travellers are looked after during delays.
Passengers have a contract with the airline to get from A to B.
So that means the airline should try to re-route a journey without charging any extra, or an administration fee, if the alternative flight would otherwise have been more expensive.

At no time in living memory has British airspace been shut down and affected this many people
Abta spokeswoman

Simon Evans, of the ATUC, said it was outrageous that some websites suggested that airlines would come back and charge the difference.
“If the airline tells you that your flight is cancelled and you want a new flight rather than a refund, the date of the new flight should be at your convenience – not subject to any time limit – and you should not have to pay any more money,” the Air Transport Users Council said.
However, the Trading Standards Institute has stressed that prices are fluid. So if travellers chose a refund and then try to book another flight themselves they are likely to find that prices are increasing owing to the increased demand.”
article

Airlines are usually obliged to provide alternate flights or forms of transportation without additional fees if a flight is delayed or cancelled. However, the magnitude of the number of delays and cancellations is so large that perhaps airlines are unable to support themselves without asking for the cost difference of alternate flights.

TSI claims that prices are “fluid”, and therefore the increase in market equilibrium price justifies the additional fees charged. However, the increase in price is mostly due to a leftward shift in the supply curve, rather than the shift in the demand curve. Although the quantity demanded of flights for each price has increased due to the delay, as you can see in the diagram, the huge shortage in flights is what can cause the equilibrium price for the airline tickets to rise.

Drug shortage in supply

“The Royal Surrey County Hospital Trust was criticised in February for exporting more than £4m of drugs.

The trust now admits it was selling a cancer drug which has now been placed on a list of medicines that are deemed hard to get hold of in England.

But it said there was “absolutely no evidence” to suggest its practices had contributed to the shortage.

The list of drugs being sold on the export market by the trust was revealed in the Health Service Journal (HSJ) after a freedom of information request.

The HSJ said the trust sold 240 packs of the cancer drug imatinib between May and October 2009. Less than a month later the drug was listed as being in short supply. ”

In the UK, exports of medicine is discouraged because it may cause shortage in their country’s domestic supply of drugs.
Looking at the article, the incentives that a hospital may have for trading medicine is the shortage of these certain drugs in other locations. If the supply in other areas of the world for this certain drug is much lower than the UK, the equilibrium between the supply and the demand curve would create a much higher market equilibrium price for the drug in that area. Hospitals in the UK would be able to make large profits by exporting their drugs and selling them at a higher price.

Data Response Reflections

The last class before spring break, we took a Data Response exam covering the entire Section 2. Unfortunately, my lack of true understanding of the section led to my abysmal score. There were many things that I could have done more to prepare, especially for definitions and diagrams. Although I practiced drawing diagrams, I could not actually memorize or understand the diagrams. Perhaps I could have studied further into these diagrams and definitions, through the triple A textbook or the powerpoint slideshows. Also, I need to be able to use the things that we learned and apply them in the Data Response section. I will have to continue studying the materials and understand them thoroughly enough so that I will be able to see and apply them in real life scenarios.

Building on a Japanese Crisis!

There were several ideas presented by this article regarding the Japanese economy, as to the specific challenges that this Japanese economy faces.

One of the problems that it presented was the fact that while Japan’s economy was down, India and China’s woke up and decided to rise.

Japan also lacks risk taking because of its culture, and therefore the rate of entrepreneurs in the nation is rather small.

Another challenge that Japan has faced was deflation in the economy.

The central and local government debt sums up to 180 percent of Japan’s GDP.

By 2030, about 1/3 of the population will be aged above 65 and therefore tax revenues will fall and the healthcare cost will increase.

Seminar on Capitalism

This past week, our class of 14 students had a seminar discussion in which we questioned the weaknesses of capitalism and whether it is the best economic system that is available to us. Although there were fears that the seminar would turn into a debate, I felt that the students stayed true to keeping it just a seminar and not a debate. We all acknowledged each others’ thoughts, and I felt that this contributed to making the discussion a success. I personally was able to see from a broader point of view because of other peoples’ insightful comments and this helped me understand economics in more ways than one. Although there were moments where the seminar was a bit slow, there were many valuable comments and opinions given by the students, and I learned a lot.

My voicethread

MY VOICETHREAD

Fire Crackers kills 19 (negative externality)

http://edition.cnn.com/2010/WORLD/asiapcf/02/27/china.firecrackers/index.html

As an example of an extreme negative externality, 19 people were killed in firecracker explosions that took place in China.

In China, people are currently celebrating the lunar new year. During this holiday, firecrackers are a widely held tradition and therefore many families and friends gather around firecrackers during this time of the year. Unfortunately, anything that contains gunpowder is potentially deadly and there were faulty firecrackers that created deadly explosions. This is a negative externality, as the cost of lives were not taken into consideration when the firecrackers were supplied/consumed.

global warming

http://www.cnn.com/2010/TECH/02/12/bill.gates.clean.energy/index.html?iref=allsearch

Billions of dollars are being invested into finding a sustainable energy source that does not pollute the planet. And even more billions of dollars are being invested into finding ways to slow down global warming. This is a result of large marginal social costs that has been neglected by thousands of firms around the world. The usage of cars, factories, powerplants, and coal demands more cost than it is being accounted for. These products all lead to the phenomenon of global warming, which causes millions of dollars of damage in the loss of crops and forests. This also prompts organizations to devote billions into finding solutions.

This diagram shows that in the consumption of products such as cars, there is a social marginal cost that is being ignored.

The equilibrium between the demand (the social marginal benefit) and the private margina cost creates the quantity and the price at which the product is being sold. However, there is a large overproduction that exists if we take into account of the negative externalities that exist in the usage of cars. Therefore, Q1 and P1 shows the true values at which the market should exist in order to avoid market failure.

Happy Valentines Day!

As Valentines Day draws closer, excitement builds among young lovers hoping to spend this special day with their special someone.

And as the month of Valentines approaches excitement builds among suppliers of chocolate and flowers who anticipate a great surge in the demand for their products. For these suppliers, Valentines Day is not only a day for romance, but a day to make a large profit. For many years, it has been tradition for both men and women alike to buy chocolates and flowers for friends, families, and lovers. And as the suppliers of chocolate and flower know very well, tradition does not break easily, and consumers do not give large though to prices on this particular day. This can be represented in a diagram by a change in the elasticity of demand. The demand becomes inelastic, meaning that the consumers become unresponsive to changes in the prices of flowers and chocolates. After all, no one’s going to stop buying chocolates for their loved ones simply because the price rises by a few dollars per box.

There is also a shift in the demand of chocolates and flowers, as this is a holiday celebrated by many people, and therefore the amount of chocolates/flowers being bought (per price) increases.

As shown in the diagram, the result of the shift and change in the demand, the quantity and price of the chocolates/flowers increases.

The combination of these two factors causes a huge increase in the profit of the suppliers. So Happy Valentines to all, suppliers and consumers alike.