Hello, this is you econs rep...
I've scanned the better group essays here for Tut Sec D
I've scanned the better group essays here for Tut Sec D
1st
2nd
2nd
cheers x)
BY
Tuesday, August 11, 2009
Tuesday, June 16, 2009
Data Question: Housing since 1945
3. Assess whether economic welfare would be increased if government either (a) reintroduced subsidies on buying a house or (b) reduced rentd for those in social housing (mainly for tenants of councils or Housing Associations).
Economic Welfare: Consumer Surplus and Producer Surplus
Consumer Surplus: Consumer surplus is the excess of the price that buyers are willing and able to pay for the good over the actual price paid. This is defined as the extra satisfaction gained by consumers from paying a price that is lower than that which they are prepared to pay.
Producer Surplus: Producer surplus is the excess of what a producer is willing and able to put up on sale for a good over the actual price her receives. This is defined as the excess of actual earnings that a producer would be prepared to accept for that output.
Subsidies: A per unit subsidy is a fixed amount of money given to the producers or consumers for each unit they sell or purchase.
Abstract from article (Useful Evidence): from the 1960s, a strong financial incentive to buy houses was introduced through the scrapping of a tax on the notational rent on owner occupied houses and the introduction of tax relief on mortgage payments. Tax relief reduced cost of mortgage repayments once the relief was given and so allowed house buyers to afford higher mortgage repayments, and therefore able to buy more expensive houses. It was justified in terms of making home ownership, more affordable to a wider range of income groups.
However, in the 1980s, the government started to phase out tax relief.
Reasons for doing so:
-Subsidies went to better off households.
-With highly inelastic price elasticity of supply of houses, the subsidy did not make housing more affordable, instead, it pushed the price of houses up.
As defined in the earlier question, housing is mostly a merit good and has external benefits. As social marginal cost is greater than private marginal benefit, a subsidy equivalent to the external marginal benefit at the socially efficient output level, QSE would shift the PMC curve vertically down by that amount PMC’=PMC-subsidy. The imposition of the per unit subsidy results in an output that corresponds to the socially efficient level of output QSE.
[Incomplete]
Credits to YiLing.
Group Members: Uyen, Natalie, YiLing, Aaron
Economic Welfare: Consumer Surplus and Producer Surplus
Consumer Surplus: Consumer surplus is the excess of the price that buyers are willing and able to pay for the good over the actual price paid. This is defined as the extra satisfaction gained by consumers from paying a price that is lower than that which they are prepared to pay.
Producer Surplus: Producer surplus is the excess of what a producer is willing and able to put up on sale for a good over the actual price her receives. This is defined as the excess of actual earnings that a producer would be prepared to accept for that output.
Subsidies: A per unit subsidy is a fixed amount of money given to the producers or consumers for each unit they sell or purchase.
Abstract from article (Useful Evidence): from the 1960s, a strong financial incentive to buy houses was introduced through the scrapping of a tax on the notational rent on owner occupied houses and the introduction of tax relief on mortgage payments. Tax relief reduced cost of mortgage repayments once the relief was given and so allowed house buyers to afford higher mortgage repayments, and therefore able to buy more expensive houses. It was justified in terms of making home ownership, more affordable to a wider range of income groups.
However, in the 1980s, the government started to phase out tax relief.
Reasons for doing so:
-Subsidies went to better off households.
-With highly inelastic price elasticity of supply of houses, the subsidy did not make housing more affordable, instead, it pushed the price of houses up.
As defined in the earlier question, housing is mostly a merit good and has external benefits. As social marginal cost is greater than private marginal benefit, a subsidy equivalent to the external marginal benefit at the socially efficient output level, QSE would shift the PMC curve vertically down by that amount PMC’=PMC-subsidy. The imposition of the per unit subsidy results in an output that corresponds to the socially efficient level of output QSE.
[Incomplete]
Credits to YiLing.
Group Members: Uyen, Natalie, YiLing, Aaron
Friday, May 29, 2009
Saturday, April 25, 2009
This is to add on to Uyen's post, on gambling and economics.
Negative externalities (Statistics)
Negative externalities (Statistics)
- 25% compulsive gamblers attempted suicide
- 672000 college students are addicited
- 35 million teens are addicted
Possible causes:
- Convenience of online gambling
- Teens treat online gambling as a game
- Glamourisation of gambling in movies and television series (E.g Casino Royale)
Government legalising gambling:
- Addiction -> inelastic demand
- If it is still banned, there will be black markets and illegal gambling
====================================================================
Social Marginal cost = Private Marginal Cost (PMC) + External Marginal Cost (EMC)
Private Marginal Cost:
- Wages for workers
- Land for building casinos and other gambling outlets (E.g Singapore Pools outlets and Singapore Turf Club)
- Law enforcenment units and counselling for addicted gamblers
External Marginal Cost:
- Rise in crime rates by gamblers, affect the safety of other Singaporeans
- Affect investment as investors do not wish to set up factories/ businesses in a place with high crime rates.
Social costs is all of the above mentioned.
=====================================================================
Private Marginal benefit:
- Increase in government revenue from taxation of casinos and Singapore Pools
- More convenient to place bets for gamblers.
- Prevent money lost to other countries when gamblers gamble overseas.
External Marginal benefit:
- More jobs created for other Singaporeans.
- Lower unemployment rate and possible effects due to unemployment.
- Attract tourists to gamble here.
- Attract investment in the gambling industry.
====================================================================
Thus the government legalise gambling when marginal cost is lower then the marginal benefits.
Si Ying =D
Monday, April 20, 2009
Gambling and Economics
Demerit goods are goods or services that have been deemed socially undesirable and over-consume through the political process. Their undesirability is usually due to external costs imposed on society when they are consumed. According to this definition, gambling can be considered as a demerit good.
There are several negative externalities which society will have to experience once gambling is made legal. These include:
Social undesirability:
· Less time spent with families, friends and other useful or healthy activities such as sports, leading to the breakdown of many families.
· Loss of trust and ties between individuals and family members if gambling is problem.
· Gambling may lead to debt and crime once gamblers are desperate for money to continue to gamble.
Economic undesirability:
· Large amount of money will be used in:
· Gambling and not in family living, church, charities
· Treatment of addicted gamblers
· Law enforcement needed
· Controlling potential crime
However, Singapore has recently legalized gambling. This is because the government understands the need for more tourist amenities on par with other popular vacation destinations, as Singapore grows in the tourism sector. As casinos are such amenities, they have been given the green light. The sheer rise in economic status has allowed the country to make some terrific investments in the tourist sector and allows visitors a unique look into the country and culture. With two new casinos in Singapore opening in the next few years and glamorous resorts also planned for simultaneous openings, Singapore is sure to become even more of a bright, shining star in Central Asia’s appeal.
In addition, there are also other external benefits:
Social benefits:
· People feel good about employment
· Gaming may be a good entertainment activity
· People find themselves engaged in activity.
Economic benefits:
· More jobs
· May provide higher wages
· Customers drawn from outside the state
· Support of community through charitable gifts/grants.
There are several negative externalities which society will have to experience once gambling is made legal. These include:
Social undesirability:
· Less time spent with families, friends and other useful or healthy activities such as sports, leading to the breakdown of many families.
· Loss of trust and ties between individuals and family members if gambling is problem.
· Gambling may lead to debt and crime once gamblers are desperate for money to continue to gamble.
Economic undesirability:
· Large amount of money will be used in:
· Gambling and not in family living, church, charities
· Treatment of addicted gamblers
· Law enforcement needed
· Controlling potential crime
However, Singapore has recently legalized gambling. This is because the government understands the need for more tourist amenities on par with other popular vacation destinations, as Singapore grows in the tourism sector. As casinos are such amenities, they have been given the green light. The sheer rise in economic status has allowed the country to make some terrific investments in the tourist sector and allows visitors a unique look into the country and culture. With two new casinos in Singapore opening in the next few years and glamorous resorts also planned for simultaneous openings, Singapore is sure to become even more of a bright, shining star in Central Asia’s appeal.
In addition, there are also other external benefits:
Social benefits:
· People feel good about employment
· Gaming may be a good entertainment activity
· People find themselves engaged in activity.
Economic benefits:
· More jobs
· May provide higher wages
· Customers drawn from outside the state
· Support of community through charitable gifts/grants.
Sunday, April 12, 2009
hello ppl. since our blog is so dead, i shall try to share some interesting stuffs pertaining to economics la.. quite sad or else... haha..
found this while reading mr brown's blog. its really interesting clip on why the american economy so sad now. haha. its on the crisis of credit.
dont worry, its not boring, in fact quite cute. and it puts cheem economics to simpler terms so that normal ppl can understand :D
its done by someone doing his thesis i think:
http://crisisofcredit.com/<-- can click to see.
yay :) hope you guys like it :D hahaha.
<3 junning
found this while reading mr brown's blog. its really interesting clip on why the american economy so sad now. haha. its on the crisis of credit.
dont worry, its not boring, in fact quite cute. and it puts cheem economics to simpler terms so that normal ppl can understand :D
its done by someone doing his thesis i think:
http://crisisofcredit.com/<-- can click to see.
yay :) hope you guys like it :D hahaha.
<3 junning
Friday, March 13, 2009
Interesting Reading
General Electric
A slipping crown
Mar 13th 2009
From Economist.com
General Electric, a bellwether of American business, suffers a blow
FOR decades America’s General Electric (GE) has worn its AAA credit rating as a badge of pride. The company has also used it to mint money in its financial-services business, GE Capital. No longer. On Thursday March 12th Standard & Poor’s (S&P), a credit-rating agency, stripped the company and its financial arm of their top-notch ratings, downgrading them to AA-plus. That added insult to the injury that GE has already suffered as a result of the deterioration in the quality of part of GE Capital’s loan portfolio.
Despite its image as an industrial behemoth with a reputation for innovating in a wide range of sectors from wind turbines to brain scanners, GE makes a good deal of money from GE Capital’s activities. Last year the outfit generated a profit of $8.6 billion, or almost 48% of GE’s total earnings. By exploiting its AAA rating, GE Capital was able to raise capital cheaply and then deploy it to fund everything from commercial-property and home loans to credit-card lending and insurance. But the chaos triggered by the credit crunch has taken the shine off GE’s cash machine, which has seen some of its property and other loans turn sour. Announcing its decision to downgrade the business, S&P predicted rising credit losses in coming months in several areas of GE Capital’s portfolio.
Although GE’s demotion from AAA was bad news, it triggered a rise in the firm’s shares, which had recently been trading at about the same price as one of the light bulbs that the company makes. No doubt investors were relieved that S&P didn’t make an even deeper cut in the company’s rating. They may also have taken comfort from the agency’s conclusion that GE’s industrial businesses should continue to pump oodles of cash, in spite of the global downturn.Yet some financial analysts are still fretting that GE Capital’s portfolio may contain more nasty surprises. They point out that the business does not mark many of its assets to their market price—a practice that has blown huge holes in the finances of many big banks. They also wonder out loud whether Moody's, another rating agency, will take a more pessimistic view of GE’s prospects when it finishes a review of the AAA rating that it still assigns to the firm.
Next week GE plans to hold an in-depth briefing on the state of the assets in GE Capital’s portfolio, which it hopes will help to dispel the cloud still hanging over the business. It has also been telling anyone who will listen that it doesn’t expect this week’s downgrade to have a significant impact on its business, though it does plan to keep shrinking GE Capital’s activities so that the unit represents no more than 30% of total profit. Jeff Immelt, GE’s CEO, has said that the overall company will continue to manage itself like a AAA-rated firm, notably by keeping plenty of liquidity to hand. GE is sitting on $48 billion of cash and has already raised over 90% of its long-term debt needs for this year—no mean feat in a dire credit market.
The company also plans to slash its dividend from the second half of 2009, which it reckons will let it conserve an additional $9 billion a year on an ongoing basis. This has made some of the company’s small investors apoplectic; they have grown used to juicy dividend payments. In his annual letter to shareholders published recently, Mr Immelt admitted that GE’s reputation had been “tarnished” because it has failed to live up to its aspiration to be a “safe and reliable growth company”. Resolving lingering doubts over GE Capital quickly will be essential if one of America’s most iconic companies is to regain its shine.
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