Microeconomics 2014

http://www.nytimes.com/2014/12/14/business/some-of-the-rich-collect-art-others-collect-passports.html?ref=business

This article describes a popular trend among millionaires and billionaires in emerging-market countries. They are buying passports, citizenship, and entrance visas to other, more stable countries like certain countries in Europe, the United Kingdom, Australia, and Canada. These countries have seen this demand, and they have seen the ability to spend that this clientele has. Countries are responding by raising the prices, thereby responding to high demand and creating price discrimination. Critics fear that these countries are catering to the wealthy, the wealthy that may have gained their money from illegal and questionable means. I also think it is interesting how this article compares stock diversity to residency diversity: “The wealthy already diversify their assets for protection. Now they want to make sure their residency is diversified as well. Why not have a portfolio of passports, too?” Billionaires are expanding their business strategies even further to protect themselves in case of emergency.

This article talked about the recent increase in mortgage applications. It increased by 7.3% in a week. The week before this one, mortgage applications actually fell by the same amount, meaning that this week put us back to where we were two weeks ago. According to the articles, the share-of-all cash home sales have been falling for almost two years now. The large mortgage companies have relaxed their policies lately, but to no avail. A good reason for the demand being so low is because houses are much too expensive in the United States these days. People don’t make enough money in order to buy these houses that construction workers are building. It doesn’t help that all the new homes being built are massive McMansions that cost a lot of money to buy, and can put a young couple very quickly in debt. Or even an older couple for that matter. The houses are too expensive for the average amount of money Americans are earning these days.

http://www.cnbc.com/id/102254636

http://www.economist.com/blogs/democracyinamerica/2014/10/greenpeace-lego-and-shell?zid=319&ah=17af09b0281b01505c226b1e574f5cc1

Lego bricks, like many modern toys, are made of an oil-derived plastic. Up until very recently, Lego had a promotional deal with the oil company Shell, making the two compliments of each other. When the demand curve shifted for one, it would shift for the other. However, after a long campaign orchestrated by the enviornmental group called Greenpeace, which was displeased by Lego’s continued partnership with a company participating in Arctic drilling, Lego finally agreed to terminate their partnership with Shell. The two are thus, no longer complimentary goods. This event may also cause a downward shift in the supply of oil from the Arctic, as now producers may have the expectation of penalties for those who stay. As Greenpeace hoped, this may reduce producers desire to enter the market.

Walmart is the world’s largest retailer. Despite this, the company still has fierce competition with other firms such as Kohls and Target. Though Walmart reported a quarterly upturn in sales when matched against comparable firms, it still has much to worry about. More so than ever, Walmart is feeling the effects of online shopping. There is an intense rivalry between Walmart and online firms such as Amazon. This worry is increasing as we approach the holiday season, a season in which sales are at their peak. To combat this threat, Walmart is instituting a price match feature at all 4,300 U.S. stores. Essentially, if shoppers can find a product for a cheaper price online, Walmart will match the price in stores. Sales in stores have been rising, but the increase has been primarily limited to home goods, health, and apparel departments. Many of the objects that are true luxuries are being bough online, and Walmart wishes to change this before the holiday season is upon us. So far this method seems to be working. Walmart’s total revenue has increased by 2.9%, bringing it to a total of $119 billion for the 13 week quarter. In comparison, similar firms only experienced an average increase of 0.5%.

This is a great example of a competitive market. Though it is not for a specific product necessarily, these ‘super stores’ as a whole can be directly compared. They are in constant competition and utilize the strategies of other firms to increase their own profits. I find it very interesting how the online market has a direct impact on the sales in physical stores, and what various firms are doing to counter the loss of sales. It will be interesting to look at the numbers after the holiday season and see if this strategy truly works. From a consumer standpoint, it seems like a good deal. You can buy a product for the same price as online without paying and waiting for shipping. I am excited to see if Amazon and other online retailers bring about a new deal to counter Walmart’s latest move.

Collectively consumers can influence market outcomes by making consumption choices based on factors other than price. If you are informed about the working conditions of people who make your jeans, you can choose to purchase jeans from those companies that provide safer working conditions. Partly in response to such informed buying, Levi Strauss & Co is providing lost cost capital to its suppliers helping them improving working conditions and environmental performance.

In present day there is an influx of 9.3 billion people who are unemployed int he United States, which has gone up from 7.6 billion during the “Great Recession”. The National Association of Business Economics did a survey conducting companies of the jobs they have available versus the possible increases that could be made in one’s salary. The amount of jobs available is an all time high in recent years. Some people think that the unemployed people are not qualified for the openings, but the NABE disagrees, saying that salaries would be increased if that was the fact.”

See: http://www.cnbc.com/id/102101347

On behalf of Austin

This article is closed related with what I have learned in the class. It talks about how the growth in people’s income influences people’s demand for goods. As people earns more in August, they are willing to spend more money on purchasing durable goods like washing machines and cars. Like what our textbook states “when people get richer, they buy more staffs.” and cars and washing machines are normal goods. So as an increase in income, the demand for cars and washing machines will also increase.

http://www.ibtimes.com/americans-spent-more-august-past-five-months-boosted-auto-sales-appliances-1696425

This article talks about  a new idea to create small homes inside of billboards. Thinking back to the idea of scarcity, we can see that housing is certainly a scarce resource. There are huge numbers of people living without homes, and this pushes the demand for housing way up. The demand for low cost housing has risen tremendously, especially in the case of homeless people. Because of that, someone has decided to enter the market, and take advantage of the increase in demand. Michal Polacek started designing a way to change billboards into low cost housing in Art school and the idea has since taken off.

Article: http://money.cnn.com/2014/10/31/smallbusiness/billboards-for-homeless/index.html?iid=SF_E_Lead

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.

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.