Problematic of Scarcity.

water is important for all living things

            National Geographic studies estimate that 1.8 billion people around the world will live in “extreme water scarcity” by 2025. Scarcity is define as to get it started the assumption is that human wants are unlimited, but the resources are not. To make sense of that statement, look at the amount of that water we rely on. According to the information, only two and a half percent of all water on earth is fresh water, and of this less than one percent is accessible for direct human use.

            Country that always stress about water is Singapore which is located in Southeast Asia. Singapore is classified as a ‘water-stressed’ country. The reason why Singapore classified as that because this country have less than 1,000m3 of domestic water that are available for each citizen. Even though, American also has a problem with water scarcity although America uses on average twice as much as other country. Nowadays, water scarcity is a global issues that currently many problems around the world. Somehow, education and technology are getting better to solve our water issues. So, let’s make a better life for you all and for me. J

Singapore is classified as water-stressed country.

 Reference       

http://geography.about.com/od/waterandice/a/Water-The-Scarce-Resource.htm

http://www.asianenvironmentalstudies.net/p/case-study-1-water-scarcity-in-singapore.html

Tha Nak

0315232

Aggregate Demand

    In the year 2008, the global financial crisis broke in UK, the interest rate were at 5%.

    In the year 2009, the UK unemployment rate is high, so the consumer and business are worry about the bank holding their funds. Therefore, the bank cut down the interest rate in order to recover the economy during the economy recession.

    The government want to boost the economy so it use the bond exchange to money and subsidize the money to bank, insurance and pension fund. So, the bank, insurance and pension fund will lower the interest rate and the business and consumer will take the money to do investment and more money is spent due to the reducing in the cost of borrowing. Thus, let the money flow in the basic circular flow of income in order to boost the economy.

Diagram 1

  As the shown on diagram 1, the interest rate have decreased. Thus, the aggregate demand curve shift to the left from AD to AD2 and the equilibrium price has decreased. In conclusion, the price level decrease from Pe to P2 and the quantity demanded of good and services decreases from Ye to Y2. Hence, the recession is created which mean a period where output decreases, unemployment increases and firm suffering losses.

List of reference:

http://www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.html

http://www.bbc.co.uk/news/business-11013715

http://www.google.com/search?q=aggregate+demand+and+supply&tbm=isch&tbo=u&source=univ&sa=X&ei=X_bbUd6_C8WLrQeyiYHgDA&sqi=2&ved=0CDQQsAQ&biw=1263&bih=615#facrc=_&imgdii=_&imgrc=k_0jBQgdkgor7M%3A%3B4rnBt9juWmugiM%3Bhttp%253A%252F%252F14solvbr.files.wordpress.com%252F2013%252F02%252Fdemand_shift_graph_2.gif%3Bhttp%253A%252F%252F14solvbr.wordpress.com%252F2013%252F02%252F06%252Fchapter-12-aggregate-demand-and-aggregate-supply%252F%3B699%3B419

Time To Revise Subsidy For Cooking Oil?

Time to revise subsidy for cooking Oil? 

Almost every year, Malaysian experiences the shortage of subsidized cooking oil. This is an ironic, because Malaysia is one of the world largest crude palm oil (CPO) producers and the raw material is plentiful the whole year. So where have all the cooking oil go? Being one of the world largest CPO producers, we should be able to have enough supply to meet the demands.

            Apparently, the supplies aren’t able to meet the demand because there are huge demands for subsidized cooking oil. Subsidized cooking oil are usually meant for household use, but research shown that 30% to 35% of the subsidized cooking oil often goes to the wrong hands – restaurant operators, hawkers, and small-scale food-based industries. Another 10% of the total domestic subsidized cooking oil quota was smuggled into neighbor countries, as their cooking oil price is twice ours.

            Therefore, the question raised by many is why isn't the Government considering revising or gradually reducing the cooking oil subsidy similar to the revision on the subsidies for sugar and petroleum?

            Some believed it is indeed high time to revise the mechanics of the local cooking oil subsidy introduced some 20 years ago. By reducing the subsidy, this will certainly reduce the amount of subsidized cooking oil to fall on the wrong hands. The non-targeted group should be made to purchase the cooking oil at the average market price instead of the subsidised price. With the price hike, the smuggling of cooking oil will be reduced and those non-targeted groups will be forced to purchase it at non-subsidized price, it would reducing the demand for subsidized cooking oil. Thus, by increasing the price of the subsidized cooking oil, there will be lesser demand, bringing the demand back to the market equilibrium rather than excess demand.

Written By 

Lim Zhi XIn 

0314713 

Reference

http://www.thestar.com.my/story.aspx?file=%2f2012%2f10%2f2%2fbusiness%2f12110226 

            

SYABAS -- a NATURAL MONOPOLY

  

Syarikat Bekalan Air Selangor (SYABAS) is the only company in Selangor which supplies water to households. The company remains as the sole water supplier direct to consumer. To start it business as a monopoly, SYABAS is require to invest a huge amount of capital, mainly for the start-up of water dams and water treatment plant.

Why there is SYABAS the only company that supplies water to household? 

There are other companies want to start up a water supplying business as SYABAS does, but they still can't enter to the market even they have enough capital.It is because of the legal barrier to entry which is patents or licenses own by SYABAS. In this case, SYABAS have gotten license from the federal government to operate the business. Thus, having just one company to supply water to consumers will help maintain a healthy market.  

As an example, we assume there are two companies supplying water in Selangor now, which are SYABAS and Ling Water Berhad. It is definite that consumers will most likely make a decision based on which company can offer them at a cheaper price. Furthermore, the number of water treatment plants and water dams will increase in our country, which will lead to over water storage facilities and pumping stations. The worst is how will they direct the piping system to each household who chooses different suppliers. In order to resolve these issues, the government has given the license to SYABAS only to operate this business. This helps to limit the entry into the industry by using license. These is why monopoly industry have extreme barriers. Moreover, SYABAS is says to be more efficient in the production of goods or services if SYABAS stay as the monopoly firm.

In conclusion, monopolies are protected from competition by barriers to entry. Therefore, it can earn a supernormal profit due to it is the only supplier. Monopoly also act as a price maker.

Reference
http://www.thestar.com.my/News/Nation/2013/01/10/Chin-Intended-takeover-of-Syabas-violates-water-concession-agreement.aspx

Written By, 

Lim Zhi Xin 

0314713

Microsoft Windows and Apple Mac iOS is an oligopoly.

  

Apple V.S Microsoft Windows

            In these two large producers for computer operating systems, oligopoly is applied between Apple and Microsoft Windows firms. Oligopoly is defining as few firms that dominate in the market structure, but they also competing in each other. According to the information that I have read, computer operating systems in 2012 are dominated by a few big firms that are provide unique products for supporting technology which is those two. The barrier to entry the market is high which is difficult since these two computer operating system is dominating the market and this high entry barrier is present due to copyrights, patents, advertisements and also economies of scale (EOS).

            In oligopoly, they face dilemma between cooperate or compete with each other. If Apple and Microsoft decide to compete with each other, they will keep continue producing a better computer system. Example, the latest Microsoft windows operating systems is windows 8 and the upcoming operating systems for Apple is iOS 7 which is competing with windows 8. However, every firm that practice oligopoly will have a temptation to cooperate because in oligopoly there is small number of firms. If Apple and Microsoft windows cooperate together they will form an illegal group which known as Cartel. They will cooperate together to limit output, price and increase profits. But it is illegal and dangerous because cartel often breakdown and maybe that is a reason until now they are still competes with each other.  By the way, which of them will earn more profits?

            In my opinion, both firms also will earn profits due to mutual interdependence of their operating systems and brand loyalty. I would like to suggest these two firms are compete with each other. What is your opinion? J

Reference Link

http://www.ehow.com/info_8233970_oligopoly-market.html

Written By, 

Tha Nak 
0315232

                                                                                                                   

About Elasticity

Elasticity

Walmart drops iPhone 5 price to $129, 4S for $39

  The price of the iPhone 5 is offering in the Walmart in the lowest prices, only $129 and the retail giant is also offering the iPhone 4S for under $40. By doing this, it can attract more customer to buy their product according to the concept of elasticity.

   Mobile phone has numerous competitors. Due to the high range of substitution iPhone tent to has a higher elasticity. The higher the level of brand, the product is more elastic. Besides, iPhone 5 knows as a luxury product which tent to have an elastic demand.

  Elasticity is used to measure of the responsiveness of people to changes in economic variables. When the price of iPhone5 splashed from  $189 to $129 the quantity demand of the customer will increases because it has elastic demand for the iPhone.

    Owing to determinants of elasticity the price of the iPhone is very expensive compare to others hand phone, so iPhone are more elastic compare to others.

  iPhone contain mobile phone internet and music downloading capability. Some people like to buy iPhone due to Apple’s music download platform knows as iTunes. However, iPhone have a close substitution know as iPod. Hence, the elasticity will become more elastic due to substitution effect. 

 

  By and large, the marketer can play around with the price of iPhone to increase or decrease the quantity demand of the iPhone as the percentage change in quantity demanded that result from 1percent change in price.

List of reference:

http://appleinsider.com/articles/13/06/22/walmart-drop-iphone-5-price-to-129-4s-for-39

http://www.theblogpaper.co.uk/article/business/31may09/price-elasticity-demand-iphone