Economics

Mr. Bach! I made some changes in my blog, so please remark this one. Thanks!

Chapter 2: Supply and Demand
New house prices go up David Freeman, the Leader- Post September 13, 2006

http://www.canada.com/reginaleaderpost/news/story.html?id=93a81211-5a82-4323-acf2-a2926fe32367&k=61203

Summary
The prices of houses in Saskatchewan continue to skyrocket causing many concerns. According to Statistics Canada, report shows that new houses in Regina rose by 9.3 percent in July. David Hepburn, the president of Saskatchewan Home Builder’s Association claims the shortage of construction materials and labour is responsible for the dramatic increase in prices. As wages are increasing, there are more demands for houses. The trades and suppliers are very busy, which affected prices greatly. Materials such as concrete, pipes, petroleum products and drywalls have all put pressure on the prices of new houses. With a shortage of labour in the 47 different trades involved in housing, the prices climb higher. Shipping cost of fuels and other limited supplies like trusses together just worsen the situation. Currently the truss suppliers and engineered floor system suppliers have a shortage of supply available and because they are up to their maximum capacity, they cannot produce more products. The pressure on sale of existing houses is also a factor affecting the prices of new houses. Also, due to the fact that there is a shortage in labour and supplies are scarce, it requires more time to complete the construction of a house, which costs builders and ultimately consumers more.

Relationship and Reflection

The article addresses the supply and demand concepts studied in this chapter. As wages increases for consumers, the demand for houses goes up as well. This is an example of the factor, income affecting demand. The change in complementary products prices such as constructions materials make house prices drive up as well. These are examples of supplies affecting prices. These supplies are inelastic as these materials are necessary to construct a house and there aren't any substitutes. Supplies also respond to prices slowly because it takes a long process to use them to build houses. As mentioned above, the shortage of labour, trades and suppliers affect prices as well because they are all scarce. Also, the article described the pressure on sales of existing houses affects the prices of new houses. This is an example of change in price of substitute products. As we all know, old houses are always a good alternative to new houses, however there aren't many old houses being sold at this moment. Therefore altnernative choices are limited. Houses may be considered inelastic at this moment but if prices continue to increase, it will become more elastic because there are other substitutes like apratments. However, this depends on whehter prices of houses exceed the prices of their substitutes.

Generally, I think the market does not have full control over the prices of products. It is based on the concepts of supply and demand. If there is a shortage of supply, then of course competition for these products will occur, which ultimately makes prices increase. Likely, if there is an increase in demand, there will also be an increase in prices. So, in other words if you want the product, you must be able to compete for it using lots of money. Being a resident of Vancouver, I witness the high costs of houses here. In fact prices of houses are much more expensive in Vancouver than it is in Saskatchewan. Mainly, it is supplies that are affecting the prices in Saskatchewan, but in Vancouver it is actually the high demand. Most people consider Vancouver being one of the best places to live in. Therefore many people choose to live in Vancouver, and as a result demand for a shelter increases. But like i've said before, old houses are not for sale, so many people will turn to new houses if they have the money to purchase one. So, with a high demand, high prcies follow. However if house prices continue to increase, and the supplies to build houses are used up and no one is willing to sell their houses, apartments etc, what will people live in? Will this affect the amount of people choosing to live in Vancouver? If this really happens then in the long run, fewer people will be living in Vancouver and our economy will also be affected. Then, maybe at that moment house prices will go back down, and the cycle just repeats!

posted by wini_lao @ 6:37 PM 0 comments

Chapter 2: Supply and Demand

New house prices go up David Freeman,
the Leader- Post September 13, 2006
http://www.canada.com/reginaleaderpost/news/story.html?id=93a81211-5a82-4323-acf2-a2926fe32367&k=61203

Summary

The prices of houses in Saskatchewan continue to skyrocket causing many concerns. According to Statistics Canada, report shows that new houses in Regina rose by 9.3 percent in July. David Hepburn, the president of Saskatchewan Home Builder’s Association claims the shortage of construction materials and labour is responsible for the dramatic increase in prices. As wages are increasing, there are more demands for houses. The trades and suppliers are very busy, which affected prices greatly. Materials such as concrete, pipes, petroleum products and drywalls have all put pressure on the prices of new houses. With a shortage of labour in the 47 different trades involved in housing, the prices climb higher. Shipping cost of fuels and other limited supplies like trusses together just worsen the situation. Currently the truss suppliers and engineered floor system suppliers have a shortage of supply available and because they are up to their maximum capacity, they cannot produce more products. The pressure on sale of existing houses is also a factor affecting the prices of new houses. Also, due to the fact that there is a shortage in labour and supplies are scarce, it requires more time to complete the construction of a house, which costs builders and ultimately consumers more.

Relationship and Reflection

The article addresses the supply and demand concepts studied in this chapter. The article stated a number of factors that are affecting demand. As wages increases for consumers, the demand for houses goes up as well. This is an example of the factor, income affecting demand. Under most circumstances, the more money consumers have, the higher the demand for the products. This relationship does not apply to all products, but houses are one of the products that can be described by this relationship. Since the demand for houses is high and the supply is low, the prices will increase. As mentioned above, the shortage of labour, trades and suppliers affect prices because they are all scarce. The number of characteristics of consumers is another factor that plays a big role in the change of demand. As we all know, when population increases, the land available will not. This means houses built on these lands will be insufficient for this large increase in population. But with a high demand being present, prices will respond by accelearting. Also, the article described the pressure on sales of existing houses affects the prices of new houses. This is an example of change in price of substitute products. As we all know, old houses are always a good alternative to new houses. The change in complementary products prices such as constructions materials make house prices drive up as well. Houses may be considered inelastic at this moment, but if prices continues to increase, it will become more elastic because there are many other substitutes. However, this depends on whehter prices of houses exceed the prices of their substitutes.

Generally, the market does not have full control of the prices of products. It is based on the concepts of supply and demand. If there is a shortage of supply, then of course competition for these products will occur, which ultimately makes prices increase. So, in other words if you want the product, you must be able to compete for it using lots of money.

posted by wini_lao @ 12:21 AM 0 comments

Chapter 1: Scarcity

Water a strategic resource Oliver Brandes,
Special to The Windsor Star Thursday, October 12, 2006 http://www.canada.com/windsorstar/news/editorial/story.html?id=4787bbd1-3dea-4ffd-8288-1df1ced24b4e&p=2

Summary

It may be surprising to know that Canada might be facing a water shortage because water scarcity has become an alarming issue throughout Canada. Aquifers are shrinking and glaciers are melting at a fast rate. The climate is also becoming warmer causing droughts in the Prairies. Environment Canada reports that with in every four communities, one of them is likely to face water shortages. An international conference – Water in the City- had a long discussion about this problem. It was suggested that the cause of today’s problem was mainly because communities responds to 21st century problems with 20th century solutions such as more concrete, bigger pipes and pumps which leads to bigger tax bills. The real challenge we are facing here is to discover a significant water management approach so it helps us conserve water. To establish this, we are hoping to manage people who live within the watersheds instead of managing the ecosystem. We can conserve water by finding alternatives to the well grounded dams, pumps and pipes we currently have or add reusing and recycling components to these reservoirs. However, most importantly is placing policies on water conservation. For this to work effectively, the community must be fully engaged. Conserving water is not only an approach for a better environment but also helps us save money on the long run.

Relationship and Reflection

It is suggested that Canada may be soon facing a water crisis, so what will happen if we don’t have access to water? We all use water for showering, cooking, agricultural and industrial work and much more. It is obvious that the demand for water exists, but the supply we have in Canada is limited. With the massive pollution contributing to global warming, our climate is undergoing major changes. All these will further threaten our water and fisheries. With water already being scarce, the prices for hydroelectricity will also be increasing. Water may also become a product used for exporting and importing as it is scarce and there’s a high demand for it. But most importantly is that scarce and inelastic products like water can be used to make big money. If this is the case, money will be for sale at high prices. Water is a necessity and we all need it for basic survival. Although water may not run out in the near future, but it is still very important to conserve water at this moment. An effective way to alert people to use water more wisely would be to increase their hydro bills. However the only way water can be conserved is to set regulations to fence out and restrict people’s access to the resource. There should also be restrictions on pollution which accounts for the contaminations of water.

posted by wini_lao @ 12:18 AM 0 comments