A Sensitive Topic

2011 is the year that candidates who are running for president have to be prepared to answer any issue in the U.S. no matter what. There's health care, immigration, education, etc. A very sensitive topic to talk about is abortion being legalized or illegalized in the United States. This is a very hard topic to answer and try to create a solution for because one may not now the background story of each woman who aborted like if they were raped, abused or if the pregnancy was to risky. This relates to economy because the cost of an abortion is over 300 dollars on a certain amount of weeks fetus has grown but the money increases as the fetus grows. Though it looks expensive, can you really put a price on a life? Before abortion was illegal in certain U.S. states, 29 per 1,000 women have aborted in a year but after it became illegalized in some countries, the amount of women who have aborted has decreased by 10 making it 19 women per 1,000 woman. Due to the illegalization of some states on abortion, clinics have closed for they no longer make enough total revenue to be greater than their total cost. Having said this, some abortion clinics have even decreased the price on abortions because they haven't reached the equilibrium of a reasonable price to some women. Again, it is a very dangerous issue to discuss, but abortion is a morally debated topic that gives profit to an entrepreneur who opens a clinic.

Source: http://www.cnn.com/2011/10/24/opinion/frum-abortion-issue/index.html?hpt=op_mid

It's All Part of the Plan

A few years back, Apple products were some of the more expensive goods in the market. Prices were high, yet the technology was so advanced that it kept consumers coming back for more. Soon enough, Apple competitors, such as Verizon, Samsung, and T-Mobile, started producing smart phones similar to the Iphone, enabling you to skip the long lines for Mac products. As soon as Apple began to be regarded as ‘overpriced’, the former Apple Co-Founder, Steve Jobs, started sketching new strategies. The company started to lower their prices to where there really isn’t much competition anymore. Sure, you can always find cheaper alternatives, but nothing as great as Apple. From the iPad, iPhone, and iPods, “the aggressive pricing, analysts say, reflects Apple’s ability to use its growing manufacturing scale to push down costs for the crucial parts that make up its devices.” For many reasons, this was a great move on their part. The new iPhone 4s came out only a few days ago, and already sold more than four million over the debuting weekend. That just goes to show how superior Apple has become in today’s world of technology. Is there really much else to argue?

The Euro is NOT the Villian

In Antonio Fatas’ Article “The Euro’s Role in the European Economic Crisis,” he disputes the theoretical argument that manipulation of exchange rates can be used to smooth the ups and downs of business cycles.  The world economy, including the United State’s economy, is threatened by conditions in several small European countries.  In Ireland, Italy, Portugal and Greece, liberal governments have historically provided generous entitlements to the citizens of the countries.  However, their government expenditures have been far greater than their tax revenues collected.  As a result, several of the smaller European economies, especially that of Greece, are currently threatened by government debt default.  Apart of the creation of the European Union involved the creation of a standard European currency, based on the Euro, with individual countries releasing control of their historical currencies in order to encourage free trade throughout the European continent.  In several European nations with marginal economies, the loss of control over currency has added to their economic woes.  In the old system where each country controlled the value of their own currency, each sovereign nation had the power to devalue their currency in order to promote growth of their GDP, allowing them to make their debt sustainable.  In his analysis, Fatas fails to conclude that currency valuation has a major impact on the economic health of the EU members, using Sweden, one of the best performers, and Greece, one of the worst performers, as examples.  The economic health of European countries appears to depend primarily on their ability to produce products and services for export rather than on currency exchange rates.

Netflix Stocks Sink as Subscribers Flee

As the third quarter has come to a close Netflix has had some shocking realizations. It was during the start of the third quarter that they made the announcement that they were now charging separately for DVD streaming and DVD rentals.  This would result in a large price increase for consumers of the Netflix package.  Despite this Netflix still was able to earn $62 million at the end of the third quarter.  But this did not keep the demand of Netflix stocks from shifting.  The demand curve for Netflix stocks had a severe inward shift after it announced its massive loose of subscribers.  At the end of the third quarter, Netflix reported its consumer base shrinking by almost 1 million.  This is the first time the consumer base of Netflix has shrank in many years and analysts say that this shrinking is not done yet.  They predict that there will be an even greater loss of subscribers by the end of the fourth quarter in December.  Netflix itself warns stockholders that it is not going to be profitable in the upcoming quarters.  This drop in shareholders and consumers can both be explained by the law of substitutes.  Many DVD rental companies are out there and for the longest time Netflix has held the most consumers.  As soon as the price is increased though, we see the substitution effect take place and consumers take their money other places that are cheaper.  Things like Vudu and Blockbuster offer similar services that Netflix does; now that Netflix has increased their prices, consumers are choosing the cheaper option.  This increase in price of Netflix streaming and postal services also shows the effects of a price rising above equilibrium.  The increased price has caused a excess supply proving that is it in fact above equilibrium. 

http://money.cnn.com/2011/10/25/technology/netflix_stock/index.htm

Netflix Wiplash Angers Customers

Netflix has become one of the most popular online movie companies in the nation throughout the last few years. Up until July of this year (2011), Netflix had kept their customers happy relativelty complain-free. However, their recent changes have led to a spike in discontent among millions of Netflix users. A Twitter user named Steve Harrison expressed his concern: "Netflix does more flip-flopping than a fish on a hot dock." Their first mistake was discontinuing free streaming video services to households that paid for its DVD-by-mail service. This alone raised monthly prices for some customers by over 60%. At the same time as this increase of price, quality of service did not change or improve. Why would a customer be willing to pay more for the same service? Two months later in September, Netflix announced another major change. It would be splitting its DVD and streaming services into two companies: Netflix and Qwikster. Now customers would have to deal with two companies rather than one when managing queues and paying bills. Seeing how upset customers were with the new addition of Qwikster and watching as stocks dropped by over 60%, Netflix decided to revoke their original decision and break off ties with Qwikster. Some customers approved of the decision, while others were still irritated with how many new decisions Netflix has made and how much the company has changed.  Kyle Wegner, a 26-year-old in Fayetteville, Arkansas, said he was going to quit using the company until he heard about the 180-degree-turn. Another less satisfied investor stated: "They're being really reactionary at this point, and that's not very comforting."

Source: http://www.cnn.com/2011/10/10/tech/web/netflix-qwikster-reaction/index.html?hpt=hp_bn6

Will Our Children Eat?

According to politicscurrenteventsworld.com, our world population by the year 2050, will have grown to 9 million people occupying our earth. As a global community, by 2050, we would have to increase our food production by a whopping 70 percent to feed up and expanding populations. Globally today, close to 1 billion people are suffering from starvation while there over been over 60 riots over shortages of food in 30 different countries in the past few years. Contrary to the overwhelming 1 billion people suffering from not being able to feed themselves and their families, 1 billion other people are eating themselves into obesity when they could possible being helping this somewhat inevitable crisis coming in the near future. While the U.S. is acknowledging this soon to be epidemic, the British government is wanting to take action and join forces to prevent this from happening, and to get started as soon as possible. So what actions do you think we as a country should take to try and prevent a shortage of food for our world in the years to come?

Facebook: Charging Users?

There are many rumors being spread that Facebook is going to start charging its users an additional fee for membership. The real question is why would anyone want to pay for something that they could get for free on Google, Twitter, MySpace or any other social networking site? Facebook’s’ main goal is to connect everyone in the world. If one had to pay, it would be leaving out millions of people that weren’t able to afford a membership no matter what the cost may be. This idea is a great indicator of supply and demand. The demand for Facebook has skyrocketed since it started in 2004. In one day, half a billion people have used the website. Facebook’s business model completely revolves around having as many users as possible. The company realized that they can’t reach their ultimate goal if they charge users.  Also, the idea of charging users is a perfect example of opportunity cost. Creators are giving up potential revenue that they could receive, for the need of masses of users to fuel their company to be successful. One final example of charging users is the idea of a tradeoff for the company.  Facebook doesn’t need any money at this point because they are bringing 4 billion in revenue this year, raising more than 2 billion in venture capital. In 2012, the company is expected to be with 100 billion. They have chosen to make their money by advertising, Facebook credits, and social games such as Farmville and Mafia wars. Eventually they may charge for subscriptions to music and TV services, but it wouldn’t make sense to charge a user to their personal account.