8 Brief Economics Essays
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1. Income elasticity of demand refers to the responsiveness of the demand for a product to a change in income. Thus, if income changes by one percent and the demand for a particular product changes by 1.5 percent in response to the change in income, the income/demand relationship is elastic. By contrast, if the demand for a particular product does not change in relation to an increase in income or if demand changes to a lesser extent than the change in income, the income/demand relationship is inelastic. The income elasticity of demand for agricultural products in the United States is less than one. This relationship is rational for a country such as the United States where the overwhelming majority of the population is well fed. As the great majority of the people are eating all they want now, an increase in income should not be expected to cause them to demand more food. Similarly, if income drops in the United States, one would not expect the demand for agricultural products to fall to the same extent, because even in recessionary periods in the modern economy of the United States, incomes remain relatively high, and agricultural products remain relatively affordable. The income demand elasticity for services in the United States is greater than one. This relationship is also rational for a country such as the United States. Services in the United States, by and large, are not essential, and even essential services such as medical care tend to be postponed when i
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honest and fair minded oil company executives. In the case under discussion, the oil companies raised prices because they could get away with the action. They justified their actions by a claim that the probable hostilities in the Gulf would constrict gasoline supplies. In actual fact, gasoline supplies were not constricted, and the resulting glut of gasoline was cleared by a gradual reduction of prices (never to a point below the price level in effect before the increase) and a curtailing of production. The net result was an unjustified transfer of wealth from consumers to the suppliers of gasoline. Blinder contends that Americans flunked Economics 101. Blinder, of course, flunked human nature 101, while continuing to view the actions of the oil suppliers through heavily tinted glasses.
4. While it is true that housing is a highly competitive market in that the market is characterized by an exceptionally large number of buyers and an exceptionally large number of suppliers, the market is highly regulated because housing holds the potential to affect so many other aspects of society that are seldom well served by the functioning of the market. These other aspects of society are almost too numerous to mention. The follow
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Some common words found in the essay are:
President Bush, Model CAPM, Services United, , Gulf Blinder, period question, comparable appraisal, electrically powered vehicles, comparable appraisal techniques, public health safety, powered vehicles, pro forma, agricultural products, health safety, change income, electrically powered, public health, appraisal techniques, level probability projected, lowest level probability,
Approximate Word count = 1481
Approximate Pages = 6 (250 words per page)
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