Does OPEC bring benefits to us???

The greatest example of cartels is OPEC.OPEC  is an organization that is made up of 12 oil-producing countries which operates as a cartel to try to control oil prices.

The goal of OPEC is to control the price of oil for the benefit of the producer.This is done by limiting the production of oil , thus causing a shortage of oil in world markets.OPEC is considered as a price maker because it has a strong effect on the overall oil market.

 

The question is, is OPEC good for us? OPEC limits the world production of oil to push up the price of oil to achieve higher profit. Because of this approach, we need to pay a higher price in order to get oil.

 













“We don’t have to stand by and watch OPEC dictate the price of gas,” says House Judiciary Chairman John Conyers, D-Mich. He think that we can do something about this anti-competitive, anti-consumer behavior.”
 

 

In my opinion, OPEC is bad for us. Because of OPEC has control over the price of oil, it can increase or decrease the price easily.  If OPEC increases the price of the oil ,consumer will need to pay a higher price in order to get oil.This will be a cost to the consumer.

 

 Reference:     http://www.newsmax.com/Newsfront/opec-cartel-illegal/2009/12/12/id/341497 

                                http://oilprice.com/Energy/Oil-Prices/Price-Of-Oil-To-Remain-High-As-OPEC-Limits-World-Production.html

Do you think price ceiling imposed by the government is helpful? (price ceiling)

Due to the recent haze in Malaysia, we have seen price of mask have increased from normal price by a few times. So what is the price ceiling regulation for when there is no action taken to them after committing Anti-Profiteering Act 2011 and the Supply Control Act 1961?

               

                                           

This act against the law has caused many people with the minimum income couldn't afford to get a face mask everyday for themself and they are getting sick because of inhaling hazardous gases. But for the moderate income earner, they are willing to buy at a higher price to avoid themselves from illness. Even with price over the price ceiling, some pharmacy stoers ran out of stock (shortage) (quantity demanded>quatity supplied). The authority should take legal action on this otherwise there is no effect on the price ceiling.

-The implementation of a price ceiling allows consumers to purchase the basic or essential items that were previously unaffordable at a higher price.

How to prevent this act of crime?

Consumers have to speak their voices out to the government.

In my opinion, government should take legal action and also give subsidy to the firms to reduce the factor of production.

References:

http://my.news.yahoo.com/stern-warning-against-hiking-price-masks-031606668.html

http://www.theposto.com/2013/?p=2854

Price Theory: Market Equilibrium (Shortage)

More than 214 countries and overseas territories or communities had reported laboratory         confirmed cases of pandemic influenza H1N1 2009, including at least 18,449 deaths.

Estimating the true number of individual flu cases and deaths is very challenging.It is because many people with flu don’t seek medical care and only a small number of those that do seek care are tested. 


                               Vaccination offers the best protection against H1N1.

                           
                   The vaccines of H1N1 shows a shortage when it just began selling.

                                             

Everyone rushed to the injection in order to prevent H1N1 and caused the demand of vaccine to increase. Despite of the increase in demand, the firm is still producing the same quantity of vaccine so the supply is remaining constant. When the demand increases, the supply is remaining constant, the demand will be more than supply and the shortage for vaccines will occur. Therefore, the supplies of vaccine need to be increased in order to solve the shortage. Shortage is a situation in which consumers are willing to buy more than producers are willing to sell. It occurs when the market price is lower than equilibrium price.

H1N1 comes too sudden, it causes thousands of deaths. I think the government needs to provide some solutions when such  thing happens again. 

How to prevent shortage???? 

The government may give subsidy to firm to reduce the cost of production so they can supply more vaccine and the price of vaccine does not increase. Therefore, everyone is able to afford to inject the vaccine and shortage does not present.



Reference:

http://www.cdc.gov/h1n1flu/yearinreview/yir5.htm

http://www.cidrap.umn.edu/news-perspective/2013/05/news-scan-h1n1-vaccine-and-adult-narcolepsy-tb-drug-shortage-ricin-arrest

 

Fiscal Policy of US

Fiscal policy is the deliberate alteration of government spending or taxation to help achieve desirable macro-economic objectives by changing the level and composition of aggregate demand. It refers to the use of the government budget to influence economic activity.

  Government spending

The main areas of US government spending in 2010, which totalled $217.89billion, were religion,education,foundations,human service organization,public society benefit organization and health  . US want to use public spending to stimulate economic activity but to no avail

           

 

Taxation              

  

Central and local government must raise revenue in order to meet its spending commitments. Revenue is raised from a number of sources including taxation and borrowing. Direct taxes, such as income tax and corporation tax, and indirect taxes such as Value Added Tax (VAT), are the main sources of revenue to the US Treasury. Borrowing has also become an increasingly important source of funding for many governments. If a government does not have enough revenue to fund its spending plans, it may borrow from the central banks or the public by selling short term securities, called bills, and long term securities, called bonds.

Changing Tax Rates

Taxes can be raised or lowered to control or expand household spending, and aggregate demand. Income tax can be adjusted in a number of ways, such as by changing:

  

• The tax free allowance

• The basic tax rate 

• The number of tax bands