Tim Harford --- How to lie with Economic Statistics

Tim Harford is a member of the Financial Times editorial board. His column, “The Undercover Economist”, which shows the economic ideas behind everyday experiences, is published in the Financial Times Newspaper and formed around the world. He is also the only economist in the world to run a problem page called “Dear Economist”, in which readers personal problems are answered with the latest economic theory.

He's first book, “The Undercover Economist” had a good sale which is nearly one million copies worldwide in almost 30 languages. His second book, “The Logic of Life“, was published early in 2008 in English, and been translated
Tim presented the BBC television series “Trust Me, I’m an Economist” and now he presents the BBC radio series “More or Less”. He is a regular contributor to other radio and TV programs, including the Colbert Report, Marketplace, Morning Edition, Today, and Newsnight. he has been published by the leading magazines and newspapers on both sides of the Atlantic, also including Forbes, Wired, New York Magazine, the Guardian, the London Times, the Washington Post and the New York Times. He won the 2006 Bastiat Prize for economic journalism.
Before becoming a writer, Tim worked for Shell, the World Bank and as a tutor at Oxford University,and earned there an M.Phil(Master of Philosophy) in economics in 1998. And he lives in London with his wife and two daughters.

He's Topics:

Explaining the huge rise in teen oral sex.

Here Tim states that teenagers having sex causes huge problems. Every year Percentage of people having sex is increased. Commonly it's about 75 or 80% of teenage and adults are having sex. Tim says that oral sex is much more safer than penetrative sex. But still if this keeps on diseases like HIV are transferred among teenagers. Many teenagers are catching those illnesses and spreading it worldwide. But products like condoms are made to prevent from those diseases and having birth. Still it's not enough because diseases still can pass it's not a 100% protection.
He discussed and made explanation for this. For example Teenagers would have less risky sex if the cost of risky sex went up. If Legislation's were tightened for example a teenager can't abort at least without having 1 parent to sign. This would decreases the amount of sex, teenagers will be more scared to have sex.



Article by by Tim Harford

How To Save Smarter

Not very long ago Americans were terrible savers. In 2007, the average person put aside 60% of every $100 . As of February personal saving estimations were more than 4% but it's still not enough. Why is it so difficult to save money?

Behavioral economists and researchers found three reasons why people find it so difficult to save. The first is temptation: We just can't resist spending we should spend in order to live . The second is lack of understanding: Our brains can't understand the profit's of savings. The third is optimism: We are so optimistic that everything will be ok if we don't save.

Fortunately, researchers have found solutions to these problems. Temptation can be cured if you make saving as much fun as spending. For example we can spend money to buy a car. But instead we can just daydream and imagine that we already bought a car and save money, because we can still buy a car. We can just make plans buy savings for example we can think if we save now later we can buy more stuff, new car, Triton fees etc.

Or try this effective technique: Remind yourself to save whenever your paycheck comes. Set up a calender or set and alarm on your phone.

Researchers Jonathan Zinman of Dartmouth College and Victor Stango of the University of California, Davis, have discovered another reason that we don’t save: We forget about the power of compound interest e.g $10,000 invested at a 5% interest rate will almost triple in 20 years. So more money is lost.

“Almost everyone severely underestimates how much interest they can earn on their savings,” Zinman says. And is also applied how we think about debts, millions of Americans pas 20% or higher interest rates on their credit-card balances. Those debts will rise if we don't save. We can't underestimate the debts and the usefulness of savings.

Over the last 20 years stock prices rose strongly. As a result, those who grew up during this period became optimistic about future investments and willingly took big risks. Older investors, shaken by the poorly performing stock market of the 1970s, acted with much more caution.

Tim says Thanks to the present financial disturbance, today’s teenagers will probably have much less trouble saving when they hit adulthood. They’ll have seen firsthand that saving is not about using your money to invest and make a killing on stocks or to own some business; it’s about putting some of your money safely aside in an uncertain world. That’s a lesson we should all start to learn.

If the government borrows a lot of money, what will this do to interest rates?

Interest rates will eventually go up because there is a massive amount of borrowing by the federal government. This is the result of the amount the government is spending - budget deficits. But gov mustn't have never had this level of spending. The government must borrow to cover all this spending. Much of the borrowing is from foreign countries such as China, India, Brazil, Japan, European countries, etc. Over time, the only way that they will loan us money is if we pay them more for the risk they are taking - which means paying them a higher interest rate. This is a major concern for the country in the long term. I hope that makes sense and helps you.

And here is the graph: it shows aggregate demand shifting left because interest rates had mount.







As Chris Told, Change in interest rates will have an impact on Unemployment, inflation, Exchange rates. All this macro economic stuff. And then The effect on inflation causes more problems, savings, etc. And then Wages, cost of production.
Crisis will occur. Entire economy will struggle causing downward growth. All this stuff could happen just because of over borrowing. I will suggest you something, " don't even borrow money from your friends, this will make successful man in the future" )

Pollution

Today i'll write about the difference between the Environment and pollution of Britain according to My country Uzbekistan.
Of course The main thing is pollution caused by cars, factory's and cigarettes(etc.) Environment and atmosphere in Uzbekistan is much more worse than in Britain Because our countries economy is too low. Government spending's are less, because they don't impose high taxes on cigarettes and on the factory's and cars. We've been in market failure since we were separated from USSR. Cigarettes are 10 times cheaper than in Britain. We should grow.. And i think we should impose 100% taxes on cigarettes and more taxes on huge factory's. But one thing is better than UK which is traffic congestion. UK has lot's of cars but we have much less. But we have massive amount of passive smokers which are destroying the atmosphere. So i thought to use fiscal policy and to tax the cigarettes so less people will buy it. Government will have more income, so they'll be able to subsidies start-ups and encourage production and consumption.

Making money from crisis

Today i wanna talk about crisis. We know that crisis effects everyone accept children. Crisis occurs abruptly, it's like a wind. Wind comes and damages the tree leafs. And the tree leafs fall. The crisis is exactly the same. It comes suddenly and and a person standing in high position suddenly falls, mostly it effects banks.

But if you are wise enough! you can make money during this crisis. But you need capital. If your and ordinary person... it'll be arduous to gain big profits. But if you have capital and your businessman or you own a business you can gain vast amount of profits. For example during crisis assets such as houses are getting cheap and some industries are ending up bankrupt. And many things are getting cheap but for a while. If you use this moment and if you buy them during the beginning of the crisis, and then you can sell it at a high price after 1 or 2 years. Or even 1 month.

There is one more way to get rich. It's by internet. You can buy and sell shares of the public limited companies in internet. When the crisis started 1 share was 0.4 dollars. This was Russian bank called "Sberbank" but now it's shares are reaching 3 dollar per share. you see if you are wise enough you could buy 100000 of shares for 40000 dollars and now you could sell it for 300000 dollars. See how much profit is it? 260 thousand dollars of profit.

also here is a source this gives more information in details.

Also for businesses if they are really wise they can make a lot! during crisis.

As business chapter 1 summary

Enterprise: process by which new businesses are formed and new products and services are brought down to the market.

Entrepreneurs: individuals who form the business and makes it grow and takes financial risks.

Enterprise skill: skill that allows individual or organisation to respond effectively in changing market situation( for example change in prices) understanding the risk, thinking and acting wisely.

Characteristics of successful entrepreneur:

- passion
- making decisions and persistence
- ability to spot and take advantages of opportunities
- skills and expertise
- creativity, vision and creation
-willingness to take risks.

The importance of risks and rewards such as profit:

Failure occurs:
- lack of finance
- skills shortage
- complexity of regulations
- poor infrastructure

Most entrepreneurs are happy to take risks if the rewards are great enough. This depends on them doing researches to minimize their failure. Outcome of taking risks is profit.
For example Dragonsden takes risk by investing their money for another businesses.
also one of the most important characteristics of an entrepreneur is to learn from their mistakes and try again.

The notion of opportunity cost

Opportunity cost: cost of the next best alternative foregone.

Sometimes we need to choose and we need to make the best decisions.

Motives for becoming an entrepreneur

More people are interested in setting up business, because:

- long-term low interest rates, makes easier to borrow money for star-ups.

-change in the political climate, so the government supports start-up businesses.

- increasing wealth, which often means that people start to look for meaning in their lives.

Government support for enterprises and entrepreneurs

Government support enterprises because they increase productivity, employ people, which means to reduce unemployment and many other reasons. They encourage growth, makes economy grow if they are successful. New and more dynamic business causes an increase in competitive pressure in markets, with new ideas, technology and more efficient working practices.

Government has made measures to make it easier to start-up and run a business, and to support a growing business. It has done this by:

- reducing the taxes, trying to establish modern tax system.

- reducing barriers for raising finance for small businesses.

- improving support for small and new businesses.

- Making law to promote competitions.

- giving financial support for voluntary and non-profit organisations that are doing excellent work.

Hw economic problem

is it possible to have no scarcity?

I think it's impossible to have no scarcity. Because everyone one want's something entire world want's something and needs something. We make choices how can we live without choices. For example your going to a holiday trip, you need to choose the best one which suits you. The best one which your pocket can afford. But if you don't choose and just go to a holiday trip without doing any researches, your trip would end up as a failure. Also assume you have two choices choices. First one is a 5 star hotel for 1 week and the second is 4 star hotel for 2 weeks. If you choose the first one you will have more delectation. This is called opportunity cost you will choose the best choice which satisfies you. There are expensive things, for example drugs. You can buy an expensive drug and a cheaper drug. Expensive drugs are expensive because they are made of expensive resources which are really scarce. Wants needs and choices are everywhere.

This picture shows the distribution of scarce resources.


And this is the Small map which explains Problem of scarcity.

And drew this diagram to show what happens when resources are scarce. As you can see supply decreases and causes the demand to contract. And prices go up. For example oil it's price is always high.


Is it likely that some wants will never be satisfied?

Yes. For example governments wants to spend lot's of money on health care but they can't, they need to spend money on road constructions too.

Finally

Holidays are over! Now from tomorrow on ill start posting new blogs...

Why Don't Prices Decline During A Recession?

According to my idea, it's because the demand is more than the supply. People wanting more, and not getting that. So the decline in supply causes the prices to rise. But if prices rise, it causes people to save more. So the savings are gonna be more. This leads to the shortage of income. Prices won't decline during recession because money supply is less. If the prices will decline money supply will be more less than before, because demand is much more then the supply.

Economies of scale HW

The idea of economies of scale is that the more you produce, the cheaper becomes the product you have produced. And the the cost of production increases when there are massive amount of supply. Producing becomes expensive.

And here is the graph:


Output is the stuff produced( e.g look at the graph, look at the level of production) and cost per unit is the cost of the stuff per unit.
Long run is the average cost of producing, whatever you make: shoes, drugs, food.
If we look at the graph there is 0 in the beginning, according to this output can be whatever even one million.
Also we can see the point Technical optimum, it's the point where the businesses wanna be. Internal economies of scale is when people save money, cost per units going down. Internal diseconomies of scale, it's the cost of more money that their making for each thing.
If you look at the arrow which goes right, it shows that, the higher the output, lower the cost per unit gets. Every extra output you make, the cost decreases little bit. And the reason for this is firms getting bigger, they are taking more people and training them to do one thing and that person gets really good at it. So you make more money you can afford better technology's, assets.

As you can see when we pass the technical optimum cost per unit goes up. Because of overproducing. Everything will cost you more per unit. And the reason for this is when business get's really huge there are lot's of workers, lot's of staff, managers. And they all get confused, they make a mistake. They make wrong estimations and etc. This can cause overproduction.

And here is another graph:


The arrow shows that we can shift the curve downwards. It's because people are Learning by doing. So when we shift it down every point i that line is the cost per unit is less than before.
And this is done by Learning by doing, the more you do something, better your gonna be at it.


b-) For example if people grow less tomatoes, it means the output of tomato juice will be less, because cost per unit will increase. If people grow more tomatoes, economies of scale for tomato juice may reach technical optimum because the output increases. But if the business is careless it can cause overproduction and the cost per unit increases again.

HW- The immediate problem facing the UK economy is a large output gap and decline in aggregate demand.

I did 2 hours of research to come up with this idea. But i'am a bit concerned about it.(

I think UK needs to lower the prices for goods. But the prices are already low, but they should be lowered a bit more. I think tightening monetary and fiscal policies wont work. If we'll think of this, in a business way.... We should do more advertising, UK needs to supply their product to other countries, so the exports will be more. For example if firms and enterprises will do more advertisements(for example offering 1 supply for the price of 3, this should help). People would buy more products and goods and the cost of labor should be decreased which will make the goods and services much more cheaper.

This is not all, i think we should use Keynesians theory to accomplish the goals. Fixed investment should fall. People needs to invest less. And excess of savings causes interest rates to fall and then we will get rid of excess supply. So the savings will be equal to investment. The interest-rate fall prevents that of production and employment. People are gonna spend more. If we don't wanna cause recession again we should stabilize government spendings, cunsumption, Investment, and exports. While getting rid of execc supply we can improve the economy too.

Blog topic 2:What has caused the significant productivity gap between UK and the US?

In 2005, Britain’s output per hour worked rose by 0.9 per cent, according to the Conference Board. But before that, it was just falling. Because productivity was less.

The answer to this question is Labour productivity, since labour came to power in 1997 Britain's output has fallen, because the cost of labour has increased, which means the quantity of labours are decreased. Since the cost of the labour is high, labours will spend less hours working than usual. Because their salary's will be higher. These facts will cause the productivity to decrease.
And here is a little graph for better understanding. I tried to draw it, unfortunately i couldn't(for some reasons :(.... I have snatched this graph from internet, but it's a nice one.





The difference beween US and UK's productivity is high. Because US uses computers better and by adopting more aggressive management of staff.Almost 80 % of the productivity difference between Britain and the US in this study came from the use of computers.

With low unemployment, long hours and high numbers of people in work, Britain must improve productivity growth if the economy and living standards are to rise rapidly.

But, Britain is in recession and there are loads of unemployed people. Britains economy is falling, it will be tough for britain to make a stability, but they have a chance to make it in 2012 Olympic games. ( only if britain doesnt explode :) )) joke

What would you understand by the term “Keynesian Economics

It's an economic theory named after John Maynard Keynes (1883 - 1946), who was a British economist. He is well-know because of his simple explanation of the Great depression causes. The theory was mainly based on a circular flow of money. His ideas got a major amount of interventionist economic policies during the Great Depression.

In this theory, one person's spendings goes towards anothers earnings, and the spendings of the earnings for another person, it effects, anothers earnings. This cycle continues and helps to support, normal functioning economy. The Great depression hit caused people to save up their money, for future uses. Under Keynes' theory this stopped the circular flow of money, economy stayed still.

Ans Keynes solutions to this was to prime the pump. By saying prime the pump he argued that government spendings should be increased, either by increasing money supply or by buying things on the market.But this was not a popular solution, during the depression.


Keynesian economics warns that people musnt't save too much, or underconsumption, and not enough consumption, or spending, in the economy. It also supports large redistribution of wealth, when needed. Keynesian economics says that there is a practical reason for the massive redistribution of wealth: if the poorer sections of society are given sums of money, they will likely spend it, rather than save it, therefore pushing economic growth. Another main idea of Keynesian economics is that trends in the macroeconomic level can unbalancly effect consumer behavior at the micro-level. Keynesian economics, also called macroeconomics..

We can see that fixed investment in plant and equipment falls from "old I" to new I(which is (a) Second(step (b), excess of saving causes interest-rate to fall, getting rid of the excess supply: so we have saving (S) equal to investment. The interest-rate fall prevents that of production and employment.

Formulas and some definitions

There are some student's who started economics, a week before. These are formulas for 4 types of Elasticity and some definitions as well.

Price elasticity of demand: Percentage change in Quantity demand / Percentage change in Price

Income elasticigty of demand: Percentage change in Quantity demand / Percentage change in income

Cross elasticity of demand: Percentage change in Quantity demand A / Percentage change in Price B

Price elasticity of supply: Percentage change in Quantity Supply/ Percentage change in Price

Or simply:
PED = %Ch. Q D / % Ch. P

YED = %Ch. Q D / % Ch.Y

XED= %Ch. Q DA/ % Ch. PriceB

PES= %Ch. Q S/ % Ch. Price


Price elasticity of demand -->>>> how demand responds to a change in price

Income elasticity of demand ----->>>> how demand responds to a change in income

Cross elasticity of demand ---->> how demand A responds to a change in price B

Price elasticity of supply ----->> how supply responds to a change in price

When PED= negative, prices go down and demand extends also Quantity is decreased

When YED = negative it's an inferior good. When YED= Positive it's a normal good

When XED = Positive it's a substitute. When it's negative it's a complement.
For example: when XED is +0.1 it's just a substitute or when it's -0.1 it's just a complement.
Also whent it's +15 it's close substitudes but if it's - 15 it's close complements.

PES: For example the price of the good increases by 10% and Quantity supplied increases by 20% then PES= 20/10 which is 2.


Also:

If Demand/supply curve is Horizontally lined it's called Perfectly elastic.

If Demand/supply curve is Vertically lined it's called Perfectly inelastic.

VIDEO

I was so nervous)) Also i couldn't rotate the video((

Economics HW ( pictures)

I think those pictures are related with externalities... The picture with the cars on it, shows the negative externality, because cars pollute the atmosphere, which effects entire world. But the picture without cars in it demonstrates positive externality, because there are no cars , the atmosphere is clear, it,s not polluted, this is a benefit to entire world. This decreases the Global warming effects.

Summary chapter 1

The word Scarcity, explains the entire economics. Economics is the study of how to allocate scarce resources in the most efficient way. We face economics all around the world. For example: you have 2 pounds, you have a choice to buy bread or to buy a bottle of coke, but you can't buy both. If you buy bottle of coke you'll be hungry, but if you'll buy a bread you'll be thirsty. This is opportunity cost- the cost of the next best alternative foregone.

Choices have to made among options that are available. This is called economic problem. Economic problems can be studied at different levels. We can study decisions made by households, small firms. Household is a group of people whose expenditure decisions are linked.

We have two types of economics:

- Macro economics- Government policies

- Micro economics- individual decisions

In economics we have 4 factors of production(economy produces a whole range of goods and services to accomplish the needs of it's population) which are:

- Land -- it's rewarded by Rent

- Labor-- it's rewarded by Wages

- Capital-- it's rewarded by interest rates

- Enterprise-- it's rewarded by profit

When individual workers, firms, regions, or a whole economy concentrates on producing goods and services and not others. This is called Specialisation. Specialisation lies at the heart of the modern economy. We trade, which involves exchange of goods and services. For example we exchange goods for other goods. Also we exchange goods or we provide services for other goods, but no money is involved, this is called barter.

Benefits of Specialisation:

- an increase in the output's of goods and services -->> country provides everything it needs. Raising living standards -> more output from resources.

- Widening the range of goods.( For example bananas or another types of fruit, that cannot be grown in UK) After the banana sales more bananas can be purchased.

- Exchange between developed and developing economies. Country's like china does the most of exports.

Why trade?

Because trade allows countries to specialise in products which they are able to make or grow properly.(factors of production)

Risks of Specialisations :

- Finite resources -> such as oil, copper -> economy suffers-> unless revenues from exports are invested sagely.

- De- industrialisation -> loss of manufacturing capacity and jobs -> Many jobs are lost.

- Bad weather -> Bad crops -> reduces incomes -> economic chaos

- Taste or needs -> less exports

- Political side of economy -> like tsunami, hurricane etc.

Division labor- it's when the production process is broken down into seprate jobs.

For example Producing knits, in the textile industries are more efficient if the production process was split up into different tasks.

We use an economic model, which is production possibility curve to show how resources are allocated. PPC shows the maximum quantities of different combination's of output.

If we produce more of product A, we should sacrifice the production of pruduct B.

A to B is sacrificing the product A and producing more of the product B.

Also a trade-off is involved here. Trade- off means weather to give up a product for another product.

As you can see in point D, we are producing the same amount of Consumer goods as in point C. We have increase in ability to produce consumer goods.

This graph shows us the Productive potential, which means the maximum output that economy can produce.

Change in Productive potential causes Economic growth.

lity to produce consumer goods.

The market economy

In the market economy resources are allocated by the forces of demand and supply. We have price system, it's a method of allocating resouces by the free movement of prices. Government has little involment in this process.

For example:

Excess supply -> fall in price -> firms less willing to pay -> Increase in price -> More firms willing to pay -> Increase in supply -> Fall in price -> firms less willing to pay and cycles around.

We have command economy and mixed economy

Command economy is when most resources are state owned nad allocated centrally. Government has a central role in all decisions that are made. Government and it's organisations are responsible for the allocation od resources. Government intervention. For example meat and bread, are heavily subsidised to keep it's price level low.

Mixed economy- it's when resources are allocated by mixture of markets and public sector involvement. Decisions involve an interaction between firms, labor and the government, mainly through the market mechanism.

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This is to improve your knowledge( let's see how smart you are) comment me the answers please))

Cost push and Demand pull Inflation

This post may help for the ones who are really behind from others..... (and for the ones who are not able to watch the video for aggregate demand)

Inflation is caused by combination of 4 . Those are:

* Supply of money goes up .

* Supply of goods goes down.

* Demand for money goes down.

* Demand for goods goes up.

Now we'll see the of cost-Push inflation and Demand-pull Inflation and we'll try understand them by using those .

of Cost-Push Inflation

If aggregate supply decreases it may cause inflation. Aggregate supply is decreased by those two main :

* An increase in wage rates

* An increase in the prices of raw materials

The decrease in aggregate supply engage(carry on) by increasing costs, and this inflation is called cost-push inflation.

Other things remaining the same, the higher the cost of production, the smaller is the amount produced. Because of the price level, rising wage rates or rising prices of raw materials such as oil causes firms to decrease the amount of employed and to shorten production.

Aggregate supply is the the total value of the goods and services produced in a country or simply 2 , "The supply of goods". The supply of goods can be shaped by other than an increase in the price of inputs , so not all 2 inflation is cost-push inflation.

What caused the price of inputs to rise?. Any combinations of the four could cause that, but the two most likely are 2 (Raw materials such as oil have become more scarce, which means quantity is less.), or 4 (The demand for raw materials and have risen). This is how we understand cost push inflation and demand-pull inflation by using 4 .

And this is the diagram: it shows that the price of the supply has increased(because supply has decreased, and demand has .

of Demand-Pull Inflation

The inflation caused from an increase in aggregate demand is called demand-pull inflation. Such an inflation may rise from any single that increases aggregate demand, but the main ones that increases the aggregate demand are:

1. Increases in the money supply(factor 1)

2. Increases in government purchases(more goods, supply increases)

3. Increases in the price level of the rest of the world.

Inflation caused by an increase in aggregate demand, is inflation caused by 4 ( which is an increase in the demand for goods, (which means Supply extends)). The three listed above, which increases the aggregate demand will also tend to increase inflation, for example:

1. Increases in the money supply, 1 inflation.

2. Increases in government , The increased demand for goods by the government causes 4 inflation.

3. Increases in the price level in the rest of the world, Suppose you are living in the UK. If the price of chocolate rises in Ireland, we should expect to see less English people buying chocolates from Irish and more Irish the cheaper chocolate from UK . From the UK's view the demand for chocolate has risen causing a price for chocolate to rise ( 4 inflation)

Inflation in

Cost-push inflation and demand-pull inflation can be explained using four inflation . Cost-push inflation is inflation caused by rising prices of inputs ,that causes 2 . Demand-pull inflation is 4 inflation, which can have many causes.

This is the diagram for Demand-pull inflation: Here we can see that Real National has increased and the prices are going up, so the demand for goods is rising, more goods needs to produced, supply is extending.

Now on this graph: Demand-pull inflation caused the demand for goods to and supply to decrease. And the point LRAS is Full unemployment. When aggregate demand increases from AD1 to AD2 this will lead the to full employment, many firms will widen their profit, they'll increases the prices, the production will be more. As employment in the will rise, the demand for goods and services will be more inelastic. And this will allow firms to increase their prices(p1 to p2)

EF Workshop 2 Demand and Supply

I know it's not and ideal graph, but at least i tried)

So this is our question:

The market for petrol

(a) A rise in the cost of refining petrol _H_

(b) A fall in bus and train fares _B_

(c) A fall in the price of crude oil and an increase in the price of cars _E_

(d) A rise in tax on petrol and a reduction in tax on cars _A_

Explanations
(a) Rise in the cost of refining petrol causes the supply curve to shift left, it means less supply and the prices increase. So the demand will contract( Remember the supply decreases demand contracts)
(b) A fall in bus and train fares, causes the demand to increase, which means various amount of people will travel by bus/train rather than cars... These effects will shift the demand curve to right causing the supply curve to extend.(demand increases supply extends)
(c) A fall in the price of crude oil will shift the supply curve to right, because cheaper the crude oil more of it will be supplied. An increase in the price of cars, shifts the demand curve to left, higher the prices demand decreases(if it's elastic)
(d) A rise in tax for petrol causes the supply curve for petrol to shift left, because, tax on petrol will raise the cost of production... Reduction in tax on cars causes people to buy more cars, which shifts the demand curve to right.


If one of my answers are wrong, comment please)

Research

Today i have realized that i need more knowledge, because i was really bad in the lessons, so i tried to get more knowledge by trying to answer questions from here and also, i have found some useful questions here. But most of the questions will seem to be hard... And also, in this website there are lot's of useful questions, i think one the questions are similar to the one which Chris gave us.

This is for EF student's

Hey guys)) I have just seen the exchange rates, and the pound is getting weak according to dollar.
According to my opinion, this is it's limit, it won't go down anymore.... So, i think that we should change our dollars into Pounds as much as we can) Remember SPICeD, it's the time... we are exports and this is the time when Pound has been weakened... we'll get more pounds for dollar. So hurry, according to my opinion we'll not have a chance after 2-3 days, or even less, because exchange rates are unpredictable.

HW(continues)

208-) B 217-) B

209-) A 218-) D

210-) C

211-) D

212-) D

213-) C

214-) A

215-) B

216-) B

Hw(continues)

2.6 Cross price and Income Elasticity of demand

187-) B 198-) A

188-) B 199 -) C

189-) B 200-) C

190-) A 201-) B

191-) A 202-) B

192-) B 203-) D

193-) C 204-) A

194-) B 205-) C

195-) D 206-) B

196-) A 207-) D

197-) D

HW(continues)

2.5 Price elasticity of Demand

163-) A 171-) A 179-) D

164-) B 172-) C 180-) c

165-) B 173-) B 181-) C

166-) A 174-) C 182-) B

167-) A 175-) D 183-) D

168-) B 176-) B 184-) D

169-) B 177-) B 185-) B

170-) C 178-) D 186-) D

Useful web page)

This is a useful web page, if you want to study economics as hard as you can. In this page, you would be able to find questions and topics, that we have been studying.

Hw, Multiple choices.

2.4
146) A 151) B 156) D 161) A
147)B 152) A 157) B 162) A
148) A 153) B 158) D
149) A 154) D 159) A
150) C 155) D 160) D

Using supply and demand analysis, explain the reasons for a rise in the price of cocaine.

According to my opinion, the demand for cocaine is inelastic. Because of that the supply for cocaine have decreased.(people still buy it for high prices) I think various amount of people stopped smoking cocaine(because of the treatment), and most of the people still don't smoke it. Most of the young adults, who are addicted to cocaine still buy it, but they are few other people buying it. The treatment for heavy cocaine users have reduced the consumption of cocaine. Because of those reasons, according to my opinion the production of cocaine have decreased in amount. The demand for cocaine is more, but supply contracts,(less supply more people buy it(prices will go up), because it's inelastic, but also because of the treatment the amount for the heavy cocaine users have decreased. This is my opinion, i don't know whether it's true or not. I think this is the cause, which makes the price of cocaine to mount.

here is the graph
:

Adding up: throughout the years the price for cocaine is becoming more cheaper.. last 2.5 decades, price for cocaine was much more expensive then this year. According to exchange rates, cocaine sellers are making less profit then they have used to, because the increase in euro and decrease in dollar gives less profit to the cocaine sellers who are selling the cocaine to America. Now it's much more profitable to take the cocaine out of the USA and to sell it to other countries. Also the price of marijuana effects the demand for cocaine. The Prices of marijuana and cocaine are negatively related, if the price for cocaine is high, marijuana maybe a substitute for some people.

Cost push and Demand pull Inflation

This post may help for the ones who are really behind from others..... (and for the ones who are not able to watch the video for aggregate demand)

Inflation is caused by combination of 4 factors. Those factors are:

* Supply of money goes up .
* Supply of goods goes down.
* Demand for money goes down.
* Demand for goods goes up.

Now we'll see the Definition of cost-Push inflation and Demand-pull Inflation and we'll try understand them by using those factors.

Definition of Cost-Push Inflation

If aggregate supply decreases it may cause inflation. Aggregate supply is decreased by those two main sources:

* An increase in wage rates
* An increase in the prices of raw materials

The decrease in aggregate supply engage(carry on) by increasing costs, and this inflation is called cost-push inflation.
Other things remaining the same, the higher the cost of production, the smaller is the amount produced. Because of the price level, rising wage rates or rising prices of raw materials such as oil causes firms to decrease the amount of labor employed and to shorten production.

Aggregate supply is the the total value of the goods and services produced in a country or simply factor 2 , "The supply of goods". The supply of goods can be shaped by factors other than an increase in the price of inputs , so not all factor 2 inflation is cost-push inflation.

What caused the price of inputs to rise?. Any combinations of the four factors could cause that, but the two most likely are factor 2 (Raw materials such as oil have become more scarce, which means quantity is less.), or factor 4 (The demand for raw materials and labor have risen). This is how we understand cost push inflation and demand-pull inflation by using 4 factors.

And this is the diagram: it shows that the price of the supply has increased(because supply has decreased, and demand has contracted.

Definition of Demand-Pull Inflation

The inflation caused from an increase in aggregate demand is called demand-pull inflation. Such an inflation may rise from any single factor that increases aggregate demand, but the main ones that increases the aggregate demand are:

1. Increases in the money supply(factor 1)
2. Increases in government purchases(more goods, supply increases)
3. Increases in the price level of the rest of the world.

Inflation caused by an increase in aggregate demand, is inflation caused by factor 4 ( which is an increase in the demand for goods, (which means Supply extends)). The three factors listed above, which increases the aggregate demand will also tend to increase inflation, for example:

1. Increases in the money supply, factor 1 inflation.

2. Increases in government purchases, The increased demand for goods by the government causes factor 4 inflation.

3. Increases in the price level in the rest of the world, Suppose you are living in the UK. If the price of chocolate rises in Ireland, we should expect to see less English people buying chocolates from Irish and more Irish purchase the cheaper chocolate from UK sources. From the UK's view the demand for chocolate has risen causing a price for chocolate to rise (factor 4 inflation)
Inflation in Summary
Cost-push inflation and demand-pull inflation can be explained using four inflation factors. Cost-push inflation is inflation caused by rising prices of inputs ,that causes factor 2 . Demand-pull inflation is factor 4 inflation, which can have many causes.

This is the diagram for Demand-pull inflation: Here we can see that Real National income has increased and the prices are going up, so the demand for goods is rising, more goods needs to produced, supply is extending.





Now on this graph: Demand-pull inflation caused the demand for goods to contract and supply to decrease. And the point LRAS is Full unemployment. When aggregate demand increases from AD1 to AD2 this will lead the economy to full employment, many firms will widen their profit, they'll increases the prices, the production will be more. As employment in the economy will rise, the demand for goods and services will be more inelastic. And this will allow firms to increase their prices(p1 to p2)


Thats all i think it's quite helpful))

W I F I su........ in efffffffff

EF have installed a new wifi in the jericho building, but that wifi . .cks, because the signal of that wifi is tooooo low. Most of the students, whos rooms are a bit far, their laptops even can't connect to the signal....( one of my friend, lex he suffers from Wifi, because the stupid signal can't reach he's room(although the wifi is new) and why should they suffer because of this wifi a? if you wanna go to student lounge or meeting room., there are loans of people there( your not the only one whos clever) and the internet is too slow, it's hard to watch a video which lasts for 5 minutes. Most of the students cant do their HW because of WIFI.(also internet)

For example: If one of my friends whos from my country, and he want's to study in Ef, and he starts to gather information(is it good or bad?) i will say the wifi is bad and some of the conditions are bad tooo. Ef needs to start to distribute it's problems, or the demand for Ef will be low, so petty amount of student's will come to study... If this kind of problem's will continue Ef will be just a ........................................ (i hope you understood) I read tom's blog about wifi and i totally agree with all the facts he wrote. EF needs to meliorate!!!!!!

Some fun, some pictures for Economics

This funny pictures shows that something(demand or supply) is shifting right or left.

This is a kind of Economic climate.




This is a Russian GDP structure for 2003, look the industry it's 26,4%, it's a big amount, but if you check the GDP structure for 2009 it might be different, but i couldn't find the same one as this.

And this is the Russian economy, it have diminished a lot since 2008, of course, because Russia's economy depends on the amount of oil they have, Ukraine stopped the oil transportation to Russia so it's economy has diminished.

British mortgage approvals rise 81 per cent

When i had a comment from my teacher Mr. Chris, in his comment there was a word which i had no idea what it is, that word was "Mortgage", so i was excited and i have made a research on this word. And i have found an interesting article to summarize.

BBA, the British Bankers' Association said: number of mortgage commendations in August has risen by 81.4% from the previous year to degrees not seen since before the worst of the credit crisis.

The figure describes that in August the numbers have decreased slightly, after seven successive monthly gains, the BBA was groovy to mark that the more important change was steady growth, with mortgage lending returning to levels last seen in the beginning of 2008.

38,186 mortgages were established in August, only 100 less than in July.

The final quantity of mortgages encouraged by the high street banks in August was £2.8 billion, which is more than £1.9 billion in July, by representing yearly growth which is just 4.6% . The figure shows repurchases and repayments.

The amount which is in the personal deposit has risen by £3.3 billion. Customers are spending less money from their credit cards, with £5.6 billion spent in August, it's a 13.6% descend from a year ago. According to BBA demand for personal loans was weak, because the balances have fallen by £1.9 billion in the first eight months of this year.

Because of the economic conditions, consumers are increasing their savings and controlling their appetite for unsecured borrowing.

G20 'to call for economy balance'

G20's peak in the US will call for major reclaims to boost a more balanced global economy, according to a research thah BBC have done.

A draft paper suggests that substantial policy changes may occur from G20 countries, including the UK, the US and China.

And by the time when stimulus packahes will continue for now, the document brought the creation of "transparent and credible" which means that support will be weakened.
Leaders will meet in Pittsburgh with the economy on their schedule..

The document states that major imbalance in the entire economy should be pressed(decreased).

If this doen't happen, the entire world will "face anaemic growth" which means the growth will be weak and slow.

still the paper doesn't propose any mechanism(process) for applying it's plans ,other than countries coming under pressure from the International Monetary Fund (IMF).

BBC business analogous Joe Lynam says that country's like China and Germany increased their Government spending's, but she says Uk needs to save more. I think this is true, because there is a budget deficit in UK, Government spending's are much more than the Revenues.

China was asked to allow it's currency,Yuan to rise, so the Chinese consumer will spend more on foreign goods.(For example my country :))) But Chinese wont do that!

Also more people argue that China should meliorate its health care, pensions, and other policies, so the people's savings who are with an additional payment will be reduced.

BY the document: Most of the facts states that the Recession will not be cured soon. Isn't it bad for English people? MR CHRIS is it bad for you?

IMF and G20's Financial Stability will be pulled up, by November, and the financial support will be more.

The document says that each country should find it's own way to roll back it's support.

HW Business( THE SMALL IDEA THAT CAME TO MY MIND)

This idea is all about ice-creams. One of my plans is franchising, i know it's a small business, but we don't have a high quality ice-creams in our country.( I know we are poor!!! but never mind.) At nights, usually i think about my future, what am i gonna do when i will be an adult. So one of the minor affair, that came to my nous is to build a big 2 flored ice-cream restaurant in my country.

The land is cheap in my country, so it wont cost me a lot. But franchising will cost me much more... According to my estimates, the profit should be more then then the expenses, and all the money that i have spent. Ice-cream is a good supply, and i think it's inelastic in our country during summer. But it's elastic during winter. First floor of my entire building will be a restaurant, and the second is gonna be an ice-cream floor. I hope people will enjoy eating their ice-creams in this building, because i will provide them lot's of opportunities.

Of course i will provide backups too, and Market Researches, and i will take care about SWOT.

10 Principles of Economics

I have just seen a video, about the Principles of economics. That video inspired me alot.

There are 10 principles of Economics. Seven of them demonstrates Micro economics, and other three, Macro economics. That video is really risible... There is a man whos making fun of the economics. People face tradeoffs, and it says, choices are bad, yeah i agree with this, before you make a choice, you should conceive. If you dont think this may lead the whole economy collapsing.

That man is making fun of economics, but the affairs that he's tattling about are all true.!

The cost of something is what you give up to get it. It's an oportunity cost. This also involves choices. Entire Economics is covered with choices and needs. Scarcity is the main weigh in Economics.

This is video also states that people are stupid. That video totally took my correspondence, because i think people are stupid.( NOT ALL) IF people were not stupid, this Crisis wouldnt accur. As well as the recession wouldn't occur in UK.

The video also states, that Trade can make everyone better off, but it's not true, trade CAN MAKE, IT WILL NOT MAKE, IT CAN! For some people trade is benefical, for some not. For example if a country makes a massive trade, it's benefical for them but it isnt! for the People in that country. Because there will be less supply of those cars, and their price will mount.

WAIT FOR FURTHER POSTS!!

UK is falling into recession

I read the BBC news, and it says that UK will sink into a recession unless the bank of England takes action. Yeah banks of England should take actions, but is it enough? I think NO, because government should come up with new ideas, which will inspire the economy and help to make it grow.

The Ernst & Young's Item club wants pound to be weakened. Why? if pound goes up it's beneficial for English people.

The Treasury and the Bank of England should start planning a large-scale currency intervention

It says, that Bank of England should interfere in the currency markets to sell the pounds and buy euro.

This tells that they are connecting a gap between these two. Why should England buy Euro? what if euro diminishes? They think euro is mounting, and this is the time to buy euro? This way to elude recession is the most stunned way ever. (this is my idea)

The article that i have read also states that housing market will follow the manufacturing sector into recession.

Manufacturing sector is already in recession, if the production is in recession it means there is less supply. So the prices for supply will increase, this may cause inflation. Uk is in a bad situation.

Many people in UK are Unemployed, this is the negative affect of recession. There are some positives affects too: Businessmans are making money, by increasing the prices of there product. Some people are just selfish, there is just one thing in their minds, which is MONEY, MONEY and MONEY!!!

They dont think of recession, about existence of other people.

WAIT FOR FURTHER NEWS

HW economics(200 word)

President of the Unites States Barack Obama condemned to the idea that Europe and America dissent on the demands for a financial stimulus. Inside the European union and European governments, debates rage to beat the crisis through the financial policy. As a leader of European government, Germany wants more proves of stimulus plans work, before investing more money. Although, American politicians worry about the cause hyperinflation, European Unions are arguing about the $6.5 billion projected infrastructure plan. Some of the Europeans dislike fresh stimulus plans. If the governments come up with right stimulus package, the pain
of the governments will turn into benefits.

Eu's single market solved some of the national problems, the gains from a return to growth will not be left in one country's borders. Dutch prime minister, Jan peter Balkenende states that European procrastination are more better than scarce tax revenues.
Mr Balkenendes organisation in the government has spent weeks discussing a fresh stimulus how to make an effort in November which was aimed mainly at the country's vast financial industry. Government extended guarantees to such behemoth dutch financial groups like ING caused Christian Democrats to worry.

Netherlands open economy is a leading voice against economic policy that invites some American congressman. Raise dutch wages, cut income taxes all these will not just absorb the income but also will escape in to savings

GOiNG DUTCH

Unemployment will rise from 3.9% to 9%, but Lans Bovenberg of Tilburg University, says that Dutch politicians can solve this problem, they have to clean up banks, boost exports and raise the retirement age, to 67.

Could Dutch politicians solve out all these measures? or is it a joke? Domestic pain can turn into gain. If that hope motivates the Dutch to spend for Europe, that will be good for everyone.

HW for economics

Economics is social science and it is important in our social life, political life, economic life and daily life. It is based on the pillar of a country which is progressing in the economic field. As it's nations are growing in the economic field. We make economic decisions every day, everything that involves arduous choices and sacrificing one benefit for another great benefit.

For example: Should I play games on my laptop instead of doing my HW? If you retain playing your laptop games, you'll get more delication,but you'll sacrifice the time to do your HW. IF you do your HW you'll not be punished in the lesson, but you'll have less delication. So economics is important and affects everyones life every single day.