Archive forOctober, 2014

Oil’s price change and influence

http://americasmarkets.usatoday.com/2014/10/27/crude-oils-drop-below-80-sinks-energy-stocks-boosts-airlines/

 

According to demand and supply, the price of crude oil go down will cause the demand of oil goes up.  Industries which need lots of oil can reduce their costs and make more profits.

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Why Malaysia Reduced Its Fuel Subsidy

The article is talking about the controversy after Malaysia reducing its fuel subsidy.

A lot of customers complains about it, because of the higher price they pay for the gas and other fuel related products.

However, the Malaysia government believes that their fuel subsidy benefits most rich people and even the foreigners. It is better to use those %7.4 billions to benefit the vulnerable and poor people. 7.4 billion dollars are a huge amount if they put into education, welfare and etc.

Some organizations argue that it depress the small company and other think it brings negative effect to the local community.

Whatever the arguments are, there are less people against about the higher fuel price this year.

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S&P 500 Margins Up

In this article the main point discussed is that the S&P 500 one of the main stock exchange groups, has the highest margins it has had in past decades.  With this there is both good and bad news, as Profit Margins going up means that the top 500 companies that make up the S&P 500, are all doing well.  However at the same time though market inflation could be another reason for this trend, as is hinted at in this article.  When there is normally a steep incline for no assumed reason, it normally means that afterwards there will also be a decline of equal proportions.  For this figure it is estimated to be up to at least 1/3 of the profit margin it is currently at, which to many would mean loosing a lot of money in a short period of time if these estimates are correct.

 

http://www.forbes.com/sites/janetnovack/2014/10/28/profit-peril-sp-500-margins-are-near-multi-decade-high/

 

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http://www.nytimes.com/2014/10/26/your-money/when-iphones-ring-the-economy-listens.html?_r=0

In the article “When the iPhone Rings, the Economy Listens”  explains the very large impact the new device has on the economy. Single handily producing more jobs and more money due to its success already. “electronic and consumer appliance store sales jumped 3.4 percent”. Apple has stated its presents in the economy and is proving to become even more powerful with every device it produces. “Apple is the biggest company, by market capitalization, in the world.” The over all power apple has is astonishing and its all due to a phone.

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Externalities of Smoking

The article I looked at is about the negative externalities of cigarettes. A couple of years ago in America, the government put a ban on smoking in public places and dramatic affects were seen. The number of children admitted to the hospital with severe asthma went down by twelve percent after the ban was placed. However the children are not the buyers, but due to the second-hand smoke, they experience a negative affect. The buyers of the cigarettes are not taking into account the children that will be around when they are smoking cigarettes; they are only thinking about their own personal benefit. The demand curve would shift down when the social benefits of smoking are taken into affect. The demand will be lower because now people are not taking just their own personal benefit into account as they realize that children are harmed from them smoking cigarettes around them.

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The Economic Case for Wiping out Ebola

http://www.businessweek.com/articles/2014-08-25/the-economic-case-for-wiping-out-ebola

This article talks about the economic costs a feared disease such as Ebola causes in the world.  Even in the infancy of Ebola, the world is seeing major projects such as mining and oil production in Liberia, as well as the peanut and rice business in Sierra Leone being severely reduced in order to take the proper precautionary steps with the disease.  The article may only talk about how the majority of the countries being impacted as of now by the disease are third world countries, but the fact the fact remains that the affects are being felt worldwide.  The article also talks about how similar patterns were observed when diseases like Malaria and HIV/AIDS first started affecting people, and how both diseases caused considerable economic losses in the countries with the highest rates of infection.  An interesting article about a prevalent subject.

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Global Surplus of Sugar Lasting Four Years

This Bloomberg article explains the current global surplus of sugar. According to the article, a global sugar surplus has been going on for the last four years.

Sugar is in most foods and drinks we consume everyday. It occurs naturally in some fruits and vegetables, and can be harvested from the sugar cane plant. Similar to petroleum, sugar too requires refinement after it’s harvested from sugar cane. Different types of sugar such as brown sugar and table sugar require different levels of refinement.

A large determining factor on the price of sugar is the introduction, and acceptance by the public of artificial sweeteners as a cheaper alternative in soda and other sweet products. Before the introduction of these artificial sweeteners, sugar was the main method of sweetening food and drinks. Because products made with artificial sweeteners are often less expensive than those made with natural sugar, consumers would lean toward the cheaper option. This Bloomberg article suggests that because of the usage of artificial sweeteners, there is a surplus of natural sugar, and therefore the demand for sugar has declined in the past couple of years. The article also suggests that prices need to drop 2.8% in order to increase demand for the would-be cheaper sugar.

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Winter is coming: Road salt supply low, demand high

This article is an example of the concepts of shifts in demand and its effect on price. This article is about the low supply of road salt, despite its high demand due to the past year’s harsh winter. Because of the higher demand and low supply of road salt, the price is increasing. Its prices have gone up because of its lack of availability. Salt mines are feeling the pressure by a large amount of local governments “trying to replenish their supply at the same time.” People are trying to stock up early for this winter, especially because there is a general consensus that it supposed to be even worse than last.

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Oil and the global economy

In this post, the author describes the effects of the fall in price of oil and how it connects to the global economy. The drop in prices effect the world’s economy due to the fact that oil is a necessity that is hard to come by. No matter what, every country needs oil, and the lowered price creates a higher GDP for each country.

The article talks about how Saudi Arabia is attempting to raise the prices because it is a top exporter of oil. They are attempting this by reducing the production. This is very similar into what we are doing in class.

There is another similarity between this article and class, which is the relationship of a domestic product and world prices. The world price continues to drop closer to the domestic price of Saudi Arabia.

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Effects of Taxes

This article addresses the new tax on junk food in Mexico. This relates to the concept of  taxes and subsidies. The government set a tax on sugary drinks and unhealthy food. This will effect the demand by consumers on all sugary drinks, especially soda. It will also effect junk food, especially chips. The higher the tax, then the more demand will decrease. The two main companies that are effected by this tax are Pepsi and Coke. They are both main contributors of these goods and will have a major decrease in demand if a tax is put into place. If there is tax on buyers, then there will be deadweight loss and the quantity demanded at a certain price would decrease. The total profits of Pepsi and Coke have declined in Mexico because of these taxes. This article demonstrates the concept of taxes on goods because it is shows an example of the effects of taxation on junk food and soda in Mexico.

http://www.washingtonpost.com/business/mexicos-junk-food-tax-hitting-pepsi-coke/2014/10/09/076f7720-4fb7-11e4-877c-335b53ffe736_story.html

 

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