Data Response

1.
     a. Demand : The quantity of a good or service consumers are willing and are able to purchase at a given price in a given time period.

      b. Economic Growth:  The measure of national income, which is the value of all the goods and services produced in an economy in a given time period, usually one year.

2.  An increment in the copper price could be the outcome of an increase in the income and economic growth in China. This lead to excess demand in China  due to the demand curve shifting to the right.


After a temporary phase of excess demand, the price had to increase to reach the equilibrium again.

3. The increase in prices of washing machines, or any electric material, due to the copper wiring. The increase in production prices will lead to a shift to the left of the supply curve.


The electric wired products' prices will increase with time, with the period of excess demand, the equilibrium price moved to the left of the demand curve, in other words, it increased.

4.  Over a couple of months, the equilibrium price of copper, will stabilize, and the period of excess demand will finish. On the producer's side, the demand will decrease, but on the consumer's side, the demand increases, which ends up in an equilibrium. The demand curve moves to the right, because of the increase in national income, and the supply cure moves to the left, due to the increased price of raw materials, like copper. The equilibrium price, will increase, as seen on the graph below:




Interestingly, the equilibrium price goes straight up, but the quantities stay constant, the only change is the equilibrium price.

Demands Essays

1. Demand is defined by the quantity of a good or service a consumer is willing to buy and is able to buy at a given price and time period; and the Law of Demand    states that if the price falls, the amount demanded of the product is increased. These are all shown on the demand curve, many things can change the demand in a certain product, it can be a movement along the curve or a change in gradient or as parallel shift to the right of left of said curve, to differentiate them, all we need to know are the factors of change in the curves.

The main differences between a movement along a demand curve and a shift in the curve itself have to do with price factors. A movement along a curve is simply a price factor, when the price increases, the demand decreases, and viceversa. The shift on a curve, on the other hand, is affected by a non-price factor, for example, income increases, price of other products, government policies, etc.; so to summarize, the difference is just price, and whether it’s involved or not. 

Imagine a demand curve with no changes on a regular product. As the price goes up, the demand goes down, and the movement along a demand curve is done by a price factor, so it's a movement along the curve. This is seen better on the diagram below: 

For what you can see, the movement along a demand curve is see by a change in price. This is a movement along a demand curve.

        

    Here’s an example, imagine you had an original salary of $1,000 per month, the salary then increases by a 20%, which means you now have an income of $1,200 per month, ceteris parabus, the total normal goods that you buy should also increase by 20%, which makes a shift to the right in the demand curve, while as if your income stays the same, the amount you can buy is remained constant so the curve didn’t show any change. Let's take soda cans as an example, when your income increases you are able to buy more soda cans, so the demand curve moves to the right, as shown on the diagram:

As we see the curve move to the right, at any price, you can buy more soda cans, swince the quantity demanded increased. 

Take another example, involving a government policy, nothing to do with money. The case study of Italy is a good example. The Italian government used a ban on smoking in public, this made less available areas to smoke, and the demand curve will shift to the left: also enforced by a fine of $250 to violators, because the actual cost didn’t increase, just the areas allowed to smoke have been reduced. This decreased demand without price being involved, so the curve shifted to the left. This can be seen on the diagram below:

The tax set by the cigarette consumption didn't affect the prize, but it affected the will of the consumers to buy cigarettes, the buy of cigarettes came down at any set price, which is a shift to the left of the demand curve.

            So to summarize, it’s all about the price that determines movement from a shift. When there’s a change and price isn’t involved, then it’s more than likely a shift to the left or right.

2. The first determinant for an increase in the demand of bicycles is a government policy. Think of the case study here, in Bogotá. On the month of February, there’s a day called, no-car day. Where particular vehicles (personal cars or non-public transport) are banned for one day, what do we students do? We go to school on a bike. Without a transport, we can’t do anything in this modern world, so due to this government day, more people are buying bicycles to keep up, so the demand curve shifts to the right. This is seen on the diagram below:

 The second of the two main factors is the comparison of the other products with the bicycle. Let’s take as an example, the prices of bicycles and skateboards, ceteris parabus, if the price of skateboards increase, the preference, due to price, will go to the bicycles. The demand for the skateboards decrease and the demand for bicycles increase. To see this better imagine the graph above as the bicycle demand curve, and the one below the demand curve for skateboards:

 

Planned Economics v Free Market

The world is centered on the money circling it, and its many varieties and currencies, and throughout history, the most famous leaders of the 20^th century thought of a different way of handling money in their own country, or state. Regardless, each of these ways was standing out in the Cold War, the classic battle of Communism against Capitalism, or in economic senses, planned economics against free market. Each has its own methods and surpasses each one of the other’s individually, almost leaving a stalemate…almost.

Planned Economics is a system that consists of the government monopolizing the money of the people of a certain country, and half the world’s countries used to take on this plan during the Cold War, but now, only 3 countries used that system in its totality: Cuba, North Korea, and Laos. The government controls the income of the country, sets the pricing, production levels, and handles the job positions. Which is mostly used in left wing political powers, such as the three countries, and some other systems that use most planned economics with free market, like Venezuela, China, and Russia.

The advantages of having planned economics is that in a perfect system, there would be no unemployment, think about a public school, where you fit, you go, there are also the adjustable prices; governments could make it to be more affordable to more people in their country. The problem with this system is that since the money is all government based, there could be a surge of a totalitarian government, and may be oppression of rights of the people[i], also gives a higher probability of corruption since, the government has such easy access to the money. The other main disadvantage is that, since everyone can get a job, the workers may not be efficient since they didn’t go through an admission process, or maybe they had to get assigned to another area because their area of expertise was full capacity.

The other system is free market, otherwise known as capitalism. It’s a system that many right-winged leaders used in the Cold War, and it’s spreading throughout the world. On a full free market system, nothing is government-owned, and it’s all about private companies like Gucci, Mercedes, Levi, among others, branded products, which are more expensive than the generic brands bought here in Bogotá with the “Exito” brand. There are currently no countries in the world ran by an entire free market economic system, in fact, the most economically free country in the world is Hong Kong with 89.3% economic liberty.[ii] Capitalism is highly Darwinian in nature,[iii] what that basically means is that it’s most suitable for the higher richer classes, because if a company loses strength, like a housing slump, there’s less demand, leading to less profit, and the poor classes suffer more that the middle, and rich classes, that is one of the big disadvantages of free market.

Capitalism also follows strictly the demand and supply principle, in which when something goes out of fashion, and a new trend emerges, the demand and supply balance is uncertain for a couple of weeks, maybe months. This is due to the time taken to slow down the “out-of-fashion”, and produce more of the new trend.

An advantage of free market lies right on the name, free. Since its all private, and no government control there’s more individual freedoms and more profit, which leads to economic growth, there is less corruption and there’s a higher quality of life. There is also the liberty of choice by the people.[iv]

 Some disadvantages lie on the supply part of the balance, sometimes the companies can’t stock enough product and have to get more raw materials (paper, rubber, steel) which leads to a higher pollution rate, there’s also a problem with the big bullies of some competing companies, there’s too much control gained and it’s just too overpowered, and with that, efficiency loss[v].

These were the two main systems of economy lying around in the world, but in reality, all but 3 countries use a mix of both systems, and all the leaders are doing is trying to find the perfect ratio between both.

In my opinion, I’m pro for a mix system, but a little biased for a planned economic system, as it’s more humanitarian and gives more people a chance to make a good quality of living, but only if administered correctly, a planned economy can work well, but my hope is that someday, the perfect ratio between planned and free market economy is found and the left and right wings in politics can be even, since the perfect system is more likely to become universal. This world better change for the good of the people, and I hope that it will.

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[i] IB Economics Text Book, page 11

[ii] http://www.humanevents.com/2007/03/05/top-10-most-economically-free-countries/

[iii] http://money.howstuffworks.com/free-market-economy1.htm

[iv] http://www.enotes.com/homework-help/what-advantages-disadvantages-free-market-eco-389689

[v] IB Economics Text Book, page 11