08S7A's Economics Blog
image image image image
Saturday, May 24, 2008
posted byHuiqi(:

Hello! Here's the link to the article on the ERP rate for BKE gantry going up by 50 cents:

Type of tax: Specific tax - fixed amount of tax per usage of the Expressway
Reasons for implementing tax:
01. Control congestion and persuade more people to take public transport
02. Increase government's revenue

Demand: Price inelastic
01. Habit - 0730 and 0800 is the peak period whereby adults need to travel to work
02. Absence of close substitutes - everyone needs to travel by the road..(?!)
03. Necessity - the Expressway is along the route to work for some adults
04. Small proportion of income - $1 is only a meagre portion of a working adult's income
Result: Greater tax incidence on consumers

Tax imposed may be ineffective in the short run
01. Existing vehicle owners will still use the Expressway despite the rise in ERP rate as it does not make for them to abandon their vehicles for public transport just because of the rise in ERP rate.
02. A rise in ERP rate will increase cost of production for the firms providing public transport (eg SBSTransit, CtiyCab etc), and this may tanslate into higher transportation costs for commuters. If the tax burden is transferred from the producers to consumers, then people may not find it as worthy to take the public transport than to travel in their own vehicles.

Tax imposed may be effective in the long run
01. The rising ERP rate, coupled with increasing fuel prices, will deter some of the license holders from buying their own vehicles and take the public transport instead.
02. Government's revenue will still increase as the rise in ERP rate will be able to compensate for the fall in demand for the Expressway.

6:22 AM

Friday, May 23, 2008
posted bySteffi


The Organization of the Petroleum Exporting Countries (OPEC) is a cartel (oligopoly). An agreement among existing suppliers to keep out competitors can be a formidable barrier.

The United States is either in or near a recession while much of the rest of the world faces a noticeable economic slowdown. This drop in income has caused demand for oil to drop (leftward shift of DD curve). Price and quantity will be lowered. OPEC will lower production (leftward shift of SS curve) even further to raise the price back to what it was initially. The drop in supply could also be due to civil unrest in oil-producing countries like Iraq, Nigeria, Iran & Venezuela. However, rapid economic development in China and India drives up global demand for world. Increase in demand for oil, coupled with a drop in supply of oil has caused price of a barrel of oil to escalate to $130++

There is price inelastic demand for oil as annual oil revenue of OPEC countries have more than quadrupled when at high prices.

Saudi Arabia possesses the largest market share in the oil industry, hence it was able to influence other major oil producers to lower the output quota of oil together.
Posted by: Steffi

5:00 AM

posted byYuJie


Lifestyles of rich turn down-market: survey

Wed May 21, 4:02 PM ET

NEW YORK (Reuters) - The lifestyles of the rich may be set for a downgrade as the U.S. economic malaise works its way up the income ladder, according to a survey released on Wednesday.

The sharp slide in confidence among lower-income households has come as no surprise in recent months as average consumers confronted the debilitating effects of a housing slump, record oil prices and a contracting job market.

Upper-income households have also proved susceptible to the slump even though their hardships are more likely to involve fewer purchases of expensive watches and designer clothes, rather than cutting back on the bare necessities.

A survey of the "affluent population" in the May edition of Spectrem Group's High Net Worth Advisor Insights newsletter showed 64 percent of respondents planned to cut back on luxury item purchases.

"Cutting luxury items is a logical step in a recession, and not very surprising," the newsletter said. "The key will be watching for the next level of personal budget cuts."

Spectrem surveyed 250 affluent U.S. households, defined as having $500,000 or more in investable assets, in late April.

The survey also found that 65 percent of the respondents said they would keep their car for a longer period of time, 38 percent planned to cut back on travel and 36 percent said they would change from international to domestic trips.

In a sign of the times, which have been marked by soaring energy costs, 47 percent said they would consider a new or used car with better fuel efficiency.

"Considering that filling up a high-end SUV can cost upwards of $80 these days, this might have become more of liability in the affluent household," the newsletter added.

The survey comes as oil prices vaulted over $130 a barrel on Wednesday, stoking fears of stagflation as crude showed no signs of ending its relentless run to record peaks.

Meanwhile, consumer sentiment broadly has fallen to 28-year lows, as measured by the latest Reuters/University of Michigan sentiment index released on Friday.

(Reporting by Burton Frierson; editing by Jonathan Oatis);_ylt=AphiiS0kdOv0EMMr0yHyqjrv5rEF

Above is an article talking about the richer population in America having to cut down on luxury goods due to the fall in economy of America. Prices of oil gone up, and many people faced recession. To the richer population in America, this might not cause a big problem, but they still have to be careful in spending their money and demand less of luxury goods and services. Thus, the demand for luxury goods would fall and when demand falls, supply is most likely to fall too. Producers would produce less of these luxury goods during this period of time to save costs. Until the economy becomes better, the rich would go back to buying luxury goods and maybe buy even more then and demand would increase greatly, prices of the luxury goods would increase or producers might produce more of the luxury goods to increase revenue.

4:21 AM

Thursday, May 22, 2008
posted byeleanor


5:43 AM

Tuesday, May 20, 2008
posted byRui Xian


The verb “googling” has become synonymous with Internet searches, a fact that speaks to Google’s dominance. But don’t expect the verb “msn-yahooing” to become part of the lexicon anytime soon.

Even with the $44.6 billion bid by Microsoft Corp. to buy Yahoo Inc., the combined company would be unable to knock Google Inc. off its web search and web advertising throne, industry watchers say.

“It’s going to be awfully hard to take two complex companies that are trailing, put them together to beat a company that has the tremendous momentum of Google,” says Bob Monroe, associate teaching professor in information technology and computer science at the Tepper School of Business at Carnegie Mellon in Pittsburgh, PA.

ndeed, even a merged Microsoft and Yahoo would still be dwarfed by Google. The web giant holds nearly 60 percent of the Internet search market share, compared to what would be a 33 percent stake for the combined Microsoft-Yahoo.

But the deal would go a long way in helping the two companies in their battle for the lucrative Internet advertising space that is expected to explode in the next decade. “I think this deal is a no brainer,” says Rich Munarriz, senior analyst of media and technology at The Motley Fool. They need to marry, he explains, because alone they would be unable to at least give Google a run for its money.


5:08 AM

posted byPenny

May 20, 2008

Details of Microsoft Offer to Yahoo

Under its latest proposal to Yahoo, Microsoft would buy its search business and take a stake in the company, people briefed on the negotiations said Monday.

As part of a complicated deal, Yahoo would spin off its Asian assets, which include a stake in the Alibaba Group, a Chinese Internet company, these people added.

The proposal, which is subject to change, is an effort by Microsoft to scuttle a search-related advertising deal between Yahoo and Google, and could expand into a full-scale takeover.

People involved said the talks were in a preliminary stage, and they added that Yahoo could still proceed with its deal with Google.

That deal calls for Yahoo to display some Google ads on its search pages. However, any deal between Yahoo and Google is likely to face antitrust scrutiny, and Microsoft is expected to lobby against such a transaction.

Spokesmen for Yahoo and Microsoft declined to comment.

Details of the negotiations were first reported by Reuters.

Under a shareholder agreement between the Alibaba Group and Yahoo, Alibaba would have first rights to buy back Yahoo’s stake if Yahoo decided to sell it, or if Yahoo itself were acquired.

Since Microsoft made its initial offer in January, Alibaba has been lining up investors in the event that this opportunity arose, according to people with knowledge of its plans.

4:14 AM

posted byPenny

Oil fluctuates around $127/bbl on supply fears

LONDON (Thomson Financial) - Oil fluctuated around $127 a barrel on Tuesday, as fresh supply concerns combined with Opec's reluctance to increase output kept prices supported within touching distance of all-time record highs.

At 10:26 a.m., New York-traded West Texas Intermediate crude for June delivery -- which expires today -- was up 2 cents at $127.07 per barrel, having set an all-time high of $127.82 per barrel on Friday. Prices closed above $127 a barrel for the first time ever yesterday.

In London, Brent crude for July delivery was down 21 cents at $124.85 per barrel.

Surging diesel demand in China has heightened supply fears, as the world's second largest energy consumer moves to ensure adequate supplies for earthquake relief efforts in Sichuan province and this summer's Olympic games.

A 24-hour strike at the French port of Fos-Lavera near Marseille, Europe's second biggest oil hub, is also contributing to fears of market tightness, with oil tankers unable to enter the harbour.

Despite record prices, the Organization of Petroleum Exporting Countries (Opec) has maintained that markets remain well supplied, with the cartel's President Chakib Khelil yesterday indicating the group was unlikely to increase output at it's next meeting in September.

Bank of Ireland (nyse: IRE - news - people ) analyst, Paul Harris said that Opec's refusal to meet prior to September, maintaining the stance that record prices are a result of speculative influences and geopolitical events rather than supply shortfalls, was 'further weighing on supply concerns and adding to upward price impetus'.

While Saudi Arabia -- the cartel's dominant member -- has boosted oil output by 300,000 barrels per day to meet demand and compensate for other producers' lower output, analysts said the market appeared to be overlooking this for now as the supply picture remains unclear.

Militant action in Opec member Nigeria, Africa's largest crude producer, has kept the market on edge, with around 20 percent of its 3 million barrels per day capacity shut-in.

Weakness in the U.S. dollar has also supported prices, with commodities priced in greenbacks becoming cheaper for holders of other currencies.

Prices movements could be volatile today due to June contract expiry for WTI, analysts said, with the market's next moves possibly set by Wednesday's weekly report of U.S. fuel inventories.

(From Forbes)

4:07 AM