Chapter 2 Blog
Link: http://www.canada.com/vancouversun/news/story.html?id=fbbda0f0-d7a4-46f5-9725-26c667b5edff
Summary
The representatives of OPEC and the Minsiter of Venezuela's economy will be discussing the oil crisis at an emergency meeting Oct 24. It is expected that the supply and demand of oil will be balanced inorder to put a stop to its decreasing value. OPEC's president said that a cut is likely and Qatar's oil minister believes it will be around 1million barrels a day. Oil prices which were at a high of $150 a barrel in July has dropped considerably (less than half that this week) largely in part to a feared global recession. Hugo Chavez, leftist president of Venezuala relies on oil revenue in order to fund the costs spent on the poor of his nation.
Connections to Operation of a Market
A global recession can lower the demand of any commodity because it affects important factors of demand (the income of the consumer and the expectations of future incomes). If a recession is expected, then consumers can also expect incomes to go down therefore there will be less of a demand for oil. Another key component in the chapter that should be mentioned would be the theory of increase in supply if price increases. The inverse of this statement holds true in this situation, as prices decrease then the supplier will respond by lowering the supply in order to offset the demand.
Reflection
The recession is beginning to take its toll on the other markets in the world. This decrease on the demand for oil will have its effects in Venezuala because its revenue is needed to fund the aid to its majority poor. This is also why countries or any state, or province should have more than one commodity to be the backbone of its economy. Take the maritimes of Canada for example. In the maritimes, fishery is the main economic stimulant, but if the demand for these products start to decrease than the economy will become unstable. With regards to the oil situation, I think the decision to reduce the supply of oil will not solve the problem because this is more of a demand oriented problem.
Sunday, October 26, 2008
Saturday, September 20, 2008
Opportunity Costs of the Afghan War
Link:http://www.canada.com/vancouversun/news/story.html?id=18ae45b4-2bbb-4f1f-8f2f-063cb66b3721
This article is about the costs of fighting the war in Afghanistan. The projected ending cost of the Afghan war is $22 billion spent on the mission, payments to replace old equipment and treatment for veterans. This cost, which was calculated by David Perry of Dalhousie University's Centre for Foreign Policy Studies can be broken down: $7billion for the cost of war (e.g: ammunition and fuel), $11billion for long term health care of veterans, $2billion for equipment used for specific missions and the final $2billion for the replacement for the replacement of the military's LAV-3 armoured vehicles. The liberal government provided funding to the Defence Department by covering 85 percent of the war cost and the Conservative government providing 29 percent, the rest paid for with the Department's own money.
Connections to Introductory Concepts
The connection I make with the current situation in Afghanistan and the chapter in our text has to do with opportunity costs. There is obviously a large opportunity cost to this war from the large government funding to the utilization of resources. In any war that is fought, the concept of opportunity costs must be applied to utilize resources effectively. The sum of $22billion does entirely cover everything in the war, so the opportunity costs would only be bigger once every cost involved in the war is covered. The money spent on this mission could of been used for other investments (e.g: more funding for health care, education, and other government services). It is not only the money that has an opportunity cost attached to it. Materials and factories needed to produce war equipment could of been used to manufactor other things. Soldiers serving in this war are also giving a large opportunity cost and that should also be considered when calculating the cost of war. Many things have to be sacrificed when a nation goes to war, and quite often the direct cost is just not worth as much as the opportunity costs.
Reflection
War is never a good thing. I am in favour of ending this war as quick as possible, as more and more Canadian soldiers have been reported wounded or dead. I commend the men and women overseas for proving aid to people in war ravaged countries such as Afghanistan, but taking into account the wounded and the opportunity cost of war, one can question whether or not this war is still worth fighting for. There are other matters back home that the government should focus on, such as the environment and economy.
This article is about the costs of fighting the war in Afghanistan. The projected ending cost of the Afghan war is $22 billion spent on the mission, payments to replace old equipment and treatment for veterans. This cost, which was calculated by David Perry of Dalhousie University's Centre for Foreign Policy Studies can be broken down: $7billion for the cost of war (e.g: ammunition and fuel), $11billion for long term health care of veterans, $2billion for equipment used for specific missions and the final $2billion for the replacement for the replacement of the military's LAV-3 armoured vehicles. The liberal government provided funding to the Defence Department by covering 85 percent of the war cost and the Conservative government providing 29 percent, the rest paid for with the Department's own money.
Connections to Introductory Concepts
The connection I make with the current situation in Afghanistan and the chapter in our text has to do with opportunity costs. There is obviously a large opportunity cost to this war from the large government funding to the utilization of resources. In any war that is fought, the concept of opportunity costs must be applied to utilize resources effectively. The sum of $22billion does entirely cover everything in the war, so the opportunity costs would only be bigger once every cost involved in the war is covered. The money spent on this mission could of been used for other investments (e.g: more funding for health care, education, and other government services). It is not only the money that has an opportunity cost attached to it. Materials and factories needed to produce war equipment could of been used to manufactor other things. Soldiers serving in this war are also giving a large opportunity cost and that should also be considered when calculating the cost of war. Many things have to be sacrificed when a nation goes to war, and quite often the direct cost is just not worth as much as the opportunity costs.
Reflection
War is never a good thing. I am in favour of ending this war as quick as possible, as more and more Canadian soldiers have been reported wounded or dead. I commend the men and women overseas for proving aid to people in war ravaged countries such as Afghanistan, but taking into account the wounded and the opportunity cost of war, one can question whether or not this war is still worth fighting for. There are other matters back home that the government should focus on, such as the environment and economy.
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