Avocados and Demand

http://www.huffingtonpost.com/2014/03/04/chipotle-guacamole-climate-change_n_4899340.html

 

The supply of avocados could be hurt by the heat wave and drought in California and Peru. This could affect the price of Chipotle’s famous guacamole. If the prices get to be too high, Chipotle will have to weigh their options. If the price to produce guacamole becomes higher than the price that consumers are willing to pay, they will have to stop producing this delicious item.

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“A fast lane for citizenship”

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.

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For home buyers, Mortgage Demand is at all time lows

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

 

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McDonalds attempts to go local

In an effort to match the demand for the concern of where ingredients are coming from, how they were created, and in what condition they arrive in before we eat them McDonalds has made some changes. Starting in January McDonalds has announced that they are offering local and regional menu specialties in an attempt to reattract customers in making them think supply would actually come from the area the special menu item came from. The idea is to have the brand image represent as a major contributor to local farmers, suppliers, and economies so more people buy from the company. When done truthfully, buying local helps us to have a bigger say in the discussion of where our money ends up and who it will benefit. When that happens the jobs stay in the area, the money stays, and the standard of living grows as a result of both. Although, McDonalds is remaining to outsource supply which gives a more negative image to the brand name and they are losing customers. They attempted to match the demand of consumers, but with a superficial approach. As stated above they really don’t care to source local supply and benefit local economy. They just care about trying to fix their decrease in sales and revenue and consumers are straying away.
If McDonalds decided to source supply locally, would it change consumer opinion?
http://www.economicimpactrating.com/lovin-mcdonalds-attempts-go-local-misses-point/

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Low Oil Prices

http://www.bbc.com/news/business-30445420

I found this article to be very interesting in relation to one of the other courses I have been taking, Global Energy and Politics. What we have seen over the course of the past few months is a very noticeable drop in oil prices across the country. The question remains, why are these prices dropping so quickly and why is the 2015 projection that of continued falling oil prices? The issue in many ways can be related back to a monopoly argument. The Saudi’s have the cheapest supply of oil and therefore have the ability to lower the price of oil on the world market by selling at a lower rate. In this case they are selling very cheap oil on the world market to undercut the recent gains in the Pennsylvania Liquid Natural Gas market. They have begun flooding the market with cheap oil to make it not economically efficient to mine in PA. Further there is another argument that the Saudi’s are trying to undercut the oil market in Iran as negotiations are ongoing and sanctions are being slowly lifted. This is also a reasonable explanation due to the religious differences of these two countries. Finally comes the argument that they are trying to undercut the Russian oil and gas markets in the same fashion. Regardless of the motive the Saudi’s are able to provide cheap oil because of their pseudo monopoly control over price.

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Externalities of Burgers

In this article, Mark Bittman discusses the prices of hamburgers and how they relate to externalities. Externalities are external costs or external benefits that fall on bystanders. Bittman acknowledges that  “What you pay for a cheeseburger is the price, but price isn’t cost.” The hamburger price is not the costs of producing the good by the producers and it’s not the cost paid by the world either. The costs of the marketers are much more than the price of a hamburger. The true cost of a product is not known unless you include the externalities. “Almost everything produced has externalities.” There will almost always be externalities from producing products. These externalities need to be calculated into the final price of the products. For example, the paper that is wrapped around a hamburger will cause an externality because if the customer throws it on the ground then a worker must pick it up for trash. The act of by the worker is an externality. It is hard to include all externalities when setting prices for products. Bittman concluded that the external costs of a hamburger might outweigh the benefits of the burger.

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Exploitation of Workers

This article explains the exploitation of workers in Qatar. A very hot topic now because of them winning the bid to host the FIFA World Cup many politicians are enraged that Fifa is allowing them to host this prestigious tournament. It is estimated that 1.4 percent of Qatars population are working as slaves with only four countries with a higher percentage. There are 1.6 million foreign workers in Qatar, which is nearly 20 times the local workforce. When looking at the normative economics of the matter the companies exploit workers. The companies exploit workers forcing extra hours, dangerous work conditions, abuse physically or even sexually, living in awful conditions and especially withholding the pay from the workers. It is common for the employers to ditch their employees after taking their passports and never paying their workers. There is a projected 4,000 lives taken once the preparations for the world cup are over. http://www.voanews.com/content/reu-world-cup-host-qatar-must-tackle-labor-abuses/2522960.html

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Income Inequality in the National Football League

This article explains the high-income inequality in the National football league. “62.4 percent of the team payrolls go to the top fifth of the NFL players in 2009, compared to 50.3 percent of total national income going to the top quintile of American households.“ The inequality of income in the NFL gets larger each year; this inequality isn’t affecting the lowest or median paid players. In fact the median NFL income has risen 41 percent while the minimum salary only 29 percent from 2000 to 2009. In terms of the distribution of income John Rawls’s Maximin Principle and the Utilitarian system would argue that this system is flawed and the lowest paid players and the median should be compensated higher. Robert Nozick’s entitlement theory would argue that no one is being harmed from the very talented players being paid higher and the market will decide who should be paid a lot or a little.
http://www.minyanville.com/mvpremium/income-inequality-increasing-dramatically-in/?refresh=1

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Stadium Funding

This article talks about how sports stadiums in the United States are now being funded by the government and taxpayers instead of the owners of the franchises. In this example they reference the new stadium for the Dallas Cowboys in which people around the country are essentially funding the building of this stadium. This is an example of distributing costs and concentrating benefits. The benefits go towards the team owners and the ticket holders while the costs are distributed broadly among taxpayers. There are 64 major league teams using this system and the annual cost to taxpayers for the 21 NFL teams that use this system in 1996 was valued at $24.3 million dollars. The value of the Cowboys franchise increased 12 percent from this new stadium. Also the Cowboys don’t have to pay property tax on the stadium, which saves their owner Jerry Jones around $17 million a year. Should take payers be funding these stadiums when there are other needs?
http://www.bloomberg.com/news/2012-09-05/in-stadium-building-spree-u-s-taxpayers-lose-4-billion.html

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Retail sales reflect oil and markets

http://www.washingtonpost.com/news/business/wp/2014/12/11/retail-sales-show-strong-growth-in-november/

This Washington Post article describes the market during the month of November, especially around Black Friday and the week or so after. It attributes high spending to the low gas prices (a normal good) and improvement in the job market, both of which cause a shift in the demand curve. People have more money to spend on gifts and other superior goods. While sales actually exceeded economists 0.4% improvement prediction by 0.5%, there was still an 11% drop during Thanksgiving week compared to that week last year. Although one might think that lower gas prices and a better job market would cause buyers to spend more, the article explains that people are still very price-sensitive and hesitant to make impulse buys, due to the unpredictability of the market.

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