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Supply and Demand in Depth

May 16, 2013 1 comment

The law of supply and demand is a theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply states that at higher prices, producers are willing to offer more products for sale than at lower prices. It also recognizes that the supply increases as price increases, and decreases as price decreases. Furthermore, it declares that those already in business will try to increase productions as a way of increasing profits. The law of demand says that people will buy more of a product at a lower price than at a higher price, if nothing changes. It additionally states that at a lower price, goods are more affordable and people can, and will, buy them more frequently. Lastly, the law of demand states that at lower prices, people tend to buy less expensive goods as substitutes for more expensive versions; this is also known in economics as the substitution effect. The law of supply and demand presents the effect that the availability of a particular product and the desire (demand) for that product has on price. If there is low supply and a high demand, the price will be high for that good. In contrast, the greater the supply and the lower the demand, the lower the price will be.

An example of the law of supply and demand is the price of oil. According to an article from MPR dated May 16 of this year,

Image“The price of oil has been dropping and the law of supply and demand has boosted gasoline prices to record levels.” The raised price of gasoline, partially caused by the “temporary” shut down of two oil refineries in Illinois, comes from a supply problem. The Chicago Daily Herald explains that “if the price goes up in China, we export our oil. It helps make us richer as a nation but the price goes up and we pay a lot more.” Although we pay more for gas because of this, the bottom line is that there is more money to be made by sending oil overseas. Furthermore, the exporting of oil is what is creating the supply issue. In another article, “U.S Oil Boom to Help Meet New Global Demand” by CNBC, the IEA states that “the shockwaves of rising U.S shale gas and light tight oil and Canadian oil sands production are reaching virtually all recesses of the global oil market.” Despite the high gas prices, the global oil demand is expected to rise 8 percent between 2012 and 2018, further raising the already elevated gas prices. Because America is a growing industrial economy, the rate of oil consumption rises simultaneously with the rate of industrial progression in our economy. New discoveries and improving technologies have increased the amount of oil that can be produced. This innovation could present the idea that it may indirectly raise the prices of gas yet again. Because more oil can be extracted at once, business could use more oil at once, therefore decreasing the supply of oil. However, an article by Floyd Norris of the New York Times states that although demand for oil is rising, “American consumption of oil is expected to be as much as one-third less than it was the last year,” by 2035. This predicted decline of oil consumption depends on how much conservation is encouraged in the years to come. The article goes on to say that the U.S promises include “increasing fuel economy in cars and trucks and at least a small increase in the use of natural gas to fuel trucks.” Furthermore, according to the IEA, if these promises are kept, “oil prices in real terms are likely to be only a little higher than they are now,” but if current policies are continued we will not be so lucky (gas prices would continue to rise rapidly).

In conclusion, the law of supply and demand plays a major role in our economy. It is the strength of a market economy. Because economics is based on the idea that people make choices by comparing the benefits of each option and choosing the most beneficial, the law of supply and demand is a necessary element in determining the price that an item should be. Goods that have a high demand are goods that people believe are the most beneficial options. However, the goods that appear most beneficial may become less beneficial if the demand of them becomes excessive. If there is excess demand of a good, the price of that good is then raised, motivating people to substitute that good for a less expensive option. This less expensive option then becomes the more beneficial one because of scarcity (people wanting more goods than are available) and because of the substitution effect. The law of supply and demand assists the understanding of basic economic ideas and is a crucial theory.


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To Preserve or not To Preserve

February 28, 2013 Leave a comment

The Electoral College is a body of people representing the states of the US, who formally cast votes for the election of the president and vice president. Over the duration of our Government course, we have taken a portion of that time to educate ourselves on the importance of the electoral college, along with the disadvantages that accompany it. In spite of the disadvantages of the electoral college, I have learned, the system should be preserved in the future. Image

The Electoral College comes with several disadvantages. Some disadvantages to the Electoral College system include that candidates that win more popular votes can be still denied the presidency. Also, many people argue over the fact that depending on which state you live in, citizens experience presidential campaigns in vastly different ways due to the Electoral College. In the case that no candidate gets the majority of the electoral votes, the vote is settled in the House of Representatives which takes out the people’s vote entirely. Furthermore, the Electoral College “is ‘dangerous,’ not only dangerous but undemocratic” (Berns, 122). The danger that Berns describes is “said to consist in the possibility that a candidate might receive a majority of the electoral votes while receiving fewer popular votes than his or her opponent” (Berns, 122). However, along with the disadvantages are many advantages.

ImageThe Electoral College is incredibly crucial to our voting system. “It would be hard to overstate the importance of the Electoral College in American politics… in every presidential election, this awkward procedure shapes the election process – from party nominations to the selection of running mates, overall strategy, fundraising activities, candidate events, distributing resources, media coverage…” (Shea, 122). The Electoral College system gives the small states a chance against the large states. Because the large states have so many more voters, it puts the small states at a disadvantage. According to the textbook, “if the selection of the president was based on popular vote, the largest states (states with the most voters) would elect their favorite son every time” (reader, 121-140). However, a candidate must receive the majority of Electoral College votes, meaning at least half of the overall number of electoral votes. This gives the small states a better chance at getting their candidate elected.

The Electoral College is therefore a necessary piece of the American democracy. Without the Electoral College, smaller states would have no chance at getting their opinion voiced because they have smaller populations and less voters. It makes each election an equal race and must be preserved.


Gun Control in Relation the Mental Illnesses

February 22, 2013 1 comment

One thing that must be considered in the discussion of the gun control debate is the presence of mental instability in those who may be purchasing guns. Before the government can take action on the gun control case, the improvement of mental health care treatment must first be improved. Although it is not fair to say that anyone with a mental health disorder is restricted from purchasing a gun, certain types of mental illnesses that may hinder decision making must be taken into account. Guns are incredibly deadly, especially in the hands of someone who is mentally unstable. Image

Guns should not be taken away entirely, because they are a crucial self defense weapon and imperative for the military. The Constitution also allows us “the right to bear arms,” and that right cannot be taken away from us. However, the government must acknowledge that a person with a mental disease such as PTSD (Post Traumatic Stress Disorder) can be very unstable, especially if they are coming from the military. The example of the death of Chris Kyle exemplifies this instability. Another example would be the Newtown, Connecticut tragedy. The shooter, officials said, was likely to be suffering from a personality disorder after being bullied by his peers for so long. Bullying, a common occurrence, opens the door to developing mental disorders that can cause such a tragedy. Image

Guns allow individuals to fight opponents that would typically be much stronger than them. The guns are not the problem, however, it is the people who are being allowed to buy guns. Background checks and mental health checks should be instituted without question. It should be obvious that a man with schizophrenia should probably not have the possession of a gun, being that his reality could be distorted.

Although people suffering from such diseases still fall under the second amendment of the Constitution and deserve their rights, it is for the common good and safety of the people to restrict the use of guns from people who fall under certain categories. Therefore, it seems reasonable solutions would be not to rid of guns entirely, but to screen those who purchase guns thoroughly, and to make an effort to improve the treatment of those suffering from mental illnesses.

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