Wednesday, February 24, 2016

Airline Tickets

Christina Heinritz
Insight AP Econ
Mrs. Straub
22 February 2016

Source: When to Buy Flights.

Airline Tickets
Spring break is just around the corner and you know what that means— warm weather, a break from homework and time to relax with friends and family. The only downfall of going on these vacations is that plane tickets for these destinations must be purchased far in advance in order to obtain them for an affordable price. As spring break and vacation days approach, the ticket prices for airlines skyrocket because there is an increase in demand since many individuals want to travel away from the cold weather in their hometowns.
When the airline industry began, it was mainly a monopolistically competitive industry with many different airlines selling similar services but offering various benefits. For example, Frontier offered free cookies and pretzels to consumers to lure them into buying tickets through their airline again for their next vacations (Pabst). Now, the airline industry has been transformed and is mostly an oligopoly that consists of four airlines: Delta, Southwest, United, and American/US Airways (Hewitt). This has changed the way the pricing is ran because the companies don’t necessarily have to all have similar pricing, but have the choice to potentially raise the prices to make more revenue for their company since there are only a few other major competitors.
Not only has the airline industry become oligopolistic, but the fuel prices to run the planes have gone down by nearly 40% (“Save”). Normally, this would shift the aggregate supply curve to the right because the resource prices decreased, but in this case, there is still prominent demand because consumers are always desiring to fly places. Since there is still a constant demand for airlines and it is an oligopoly, the ticket prices for flights aren’t required to be lowered, allowing airline companies to make even more than they would if they had stayed a monopolistically competitive industry. A research analyst, Patrick Surry, states that, “Jet fuel prices...have plunged to about $1.00 per gallon as oil prices have dropped...Since fuel represents about 30% of an airline’s costs, them a lot more flexibility in terms of competing on price,” (Lee). Along with that, the video linked below provides more information about the cost of flight tickets and how they have gone up 1.5% in just the last year (“Save”).
The drastic fluctuation of airline ticket prices affects the number of families that are able to purchase tickets during the spring time. Families with a higher disposable income can afford going on vacations by airplane. Others who have a lower disposable income tend to stay in the area, go somewhere close from their hometown or go on road trips versus taking a flight to their destination. By doing this, they are capable of saving money to invest in other options. Another option opposed to buying plane tickets with seating right next to each other is booking seats individually (“Save”). Although this may be a negative externality since one has to sit next to strangers instead of people they know, individuals are still able to travel from place to place in a shorter amount of time and can save money based on if they purchase a ticket within 27-114 days before their vacation (Travel Tips). According to the graph above, the prime time to book a plane ticket is 47 days before the vacation because it is not cutting it too close to the deadline but still allows for decent seating arrangements that one desires (When to Buy Flight Tickets).
So will the airplane ticket prices ever come down? The answer is no, not likely, because the airplane industry has become an oligopoly and has no incentive to lower the prices because there is a constant demand to get from place to place and air travel is one of the fastest options (Hewitt). Also, the low fuel prices assist the industry greatly in continuing to make revenue and I don’t believe that the ticket prices will be going down anytime soon unless there is an open on a flight needing to be filled.
Works Cited
"Save Big on Airline Tickets." ABC News. ABC News Network, 2015. Web. 22 Feb. 2016.
Hewitt, Ed. "Oil Is Cheap -- So Why Aren't Airfares?" The Independent Travel Inc., 2016. Web. 22 Feb. 2016.
Lee, Laura. "Even Lower Airfare Prices in 2016." Fox Business. Fox 6 News Network, LLC, 19 Jan. 2016. Web. 22 Feb. 2016.
Pabst, Georgia. "Frontier Airlines Says Goodbye to the Cookie." JS Online. Journal Sentinel, Inc., 1 Apr. 2012. Web. 22 Feb. 2016.
Travel Tips. "" CheapAir., 11 Feb. 2015. Web. 22 Feb. 2016.
When to Buy Flights. 2014. CheapAir. Web. 22 Feb. 2016.

Friday, February 19, 2016

America is Fat

Bennett Eldredge
Mrs. Straub
Insight Econ
Feb 16, 2016
America is Fat
Rising obesity rates alone have the capability of hindering the United States of America’s self proclaimed title as the greatest country on earth. Well, not really. The US is, and will remain, the greatest country on earth; regardless of the amount of overweight people. But that doesn't mean this epidemic can be taken lightly. The United States must make a private/public combined effort to effectively combat grossly high obesity rates.
In comparing obesity rates we do recognize the fact that these numbers are only as accurate as the bmi test itself. Consider bmi as a function of weight over height. After research and sampling a threshold is set; a ratio that defines where healthy stops and obese begins. Today that number is 25 (“Obesity”) (this number sounds high but there are other factors that go into the formula as well). Unfortunately this system makes mistakes. Consider “the rock”, Arnold Schwarzenegger, or your favorite NFL running back. Their ratios of weight to height often fall above that threshold. Are they unhealthy? Of course not, but the bmi would say they are. For the sake of this paper we will assume that the number of people that fit into that category is insignificant; meaning it is too small to have any major effects on the obesity rate of the whole population.
With that out of the way we can begin to discuss the number of people considered overweight in the US. Take a guess. What percent of the United States population do you think is overweight? 40%? 50%? The answer is 69%. But that is just overweight, not obesity. The US has an obesity rate, of 35%. That means that 2 out of every 3 people in the US are overweight and 1 out of 3 people are obese (“Obesity”). That’s really bad. In fact, that is worse than every other developed country in the world. The chart below compares the US obesity rates in 2008 to other countries. The data used above are statistics from four years later in 2012.
They say not to compare yourselves to others. The true measure of success or progress is a comparison with ones self. So let’s focus on us, not the other developing nations we compete with. It’s even worse! Below is a chart produced by the Center for Disease Control and Prevention.

From 1960-2012 we have experienced an increase in obesity rates of almost 30%. That is ridiculous. Coincidentally, the fast food market also exploded during this time period. In 1960 McDonalds had 100 franchises in operation around the US. Today they have over 14,000 (“McDonalds”) . That is just McDonalds, that does not include all of the other fast food franchises that have emerged. The US government has to take drastic action to combat this epidemic.
They key to an effective solution is a change in demand. Not a change in aggregate demand, but a shift of demand from one market to another. In this shift there is a winner and a loser. The loser, is the fast food market. Offering more healthy options may help dampen the eventual loss in demand, but it will not stop it. Either way the change will create a surplus in the fast food market. The demand will likely move to other health oriented markets. Possible options include supplemental markets, grocery store markets, and fitness markets. Although unlikely, this effect could happen naturally without government intervention. As a major determinant of demand, changes in beliefs in American society have the potential to help drive this change. Younger generations have began to adopt a more health oriented lifestyle. Boomers are beginning to exercise more due to its positive effects on aging. The change is happening, slowly. Consumer education is the most important factor in speeding it up. Consumers need to be educated on the effects of a healthy lifestyle and more importantly, the effects of an unhealthy lifestyle.
The change can happen. I do acknowledge that I may be overly optimistic, but I feel as though this change has begun. America as a whole will go back to a more healthy lifestyle. A lifestyle that is better for citizens. A lifestyle that leaves no question about who the greatest country on earth is.

Works Cited
"McDonald's North America Restaurants by Country 2014 | Statistic."Statista. Statista, 2016. Web. 18 Feb. 2016.
"Obesity and Overweight." Centers for Disease Control and Prevention. Centers for Disease Control and Prevention, 30 Sept. 2015. Web. 18 Feb. 2016.
"Prevalence of Overweight, Obesity, and Extreme Obesity Among Adults: United States, 1960–1962 Through 2011–2012." Centers for Disease Control and Prevention. Centers for Disease Control and Prevention, 19 Sept. 2014. Web. 18 Feb. 2016.

Thursday, February 18, 2016

We Benefit, Oil Manufacturers Don't

Jackie Henderson
Mr. Reuter
A1 Economics
16 February 2016
We Benefit, Oil Manufacturers Don’t
Gas prices have been on a wild roller coaster throughout the past decade, but what determines the gas prices? The price of oil is a factor when determining gas prices. Oil makes up 67% of gasoline, so when the oil prices are changing, so are the gas prices.  Gas prices have been ranging from up to 4$ a gallon, to $1.45 a gallon by winter, but what why does the price for gas drastically change? There are a lot of key factors in ensuring low gas prices, but when the economic demand for gas goes down, the cost goes down. These low gas prices are definitely nice for us, they are not so nice to the supplier. Oil is traded globally, which means that something could happen on the other side of the world, and we would see a change at the local gas station prices.

As you see in the diagram above, from December 2015 to February 2016, the price for oil (sold in barrels) has dropped 26.62%. The price for oil has sunk so low that it will be years for it to reach the high prices it used to be.
Venezuela, Nigeria, Ecuador, Brazil and Russia are just a few countries that are suffering economic and political turbulence. Many people have been laid off because there is no need for many people working in the industry anymore, which means they aren’t getting income. It’s not people directly in the oil companies,  its companies that supply materials and different tools into the oil industry. An example are companies that produce frack, for oil manufacturing. All of these underlying factors  are shaping gas prices.
The graph shown above provides information on how many people have been laid off. All of these companies contribute to the oil industry, but they don’t need a lot of people working for them anymore since the oil prices have plunged.
Overall the point is that we are benefiting from low gas prices, but underneath that $1.45 a gallon, are companies and workers being laid off that need jobs.

Works Cited
Challenger, Grey. "Oil Fallout: U.S. Companies Kill over 51,000 Jobs." CNNMoney. Cable News Network, Mar.-Apr. 2015. Web. 15 Feb. 2016.

Reuters. "Oil and Gasoline." - Petroleum. 01 Jan. 2016. Web. 15 Feb. 2016.

Gilmour, Jared. "Gas Prices: 5 Reasons They Rise and Fall." The Christian Science Monitor. The Christian Science Monitor. Web. 15 Feb. 2016.

Krauss, Clifford. "Oil Prices: What’s Behind the Drop? Simple Economics." The New York Times. The New York Times, 09 Feb. 2016. Web. 15 Feb. 2016.

Impact of Rugby World Cup on Economy

Rugby World Cup
Emily Becker

There is no doubt that people all over the world love their sports, however certain sports are more global than others. Football is mostly played in the US, soccer is more spread out but there is one sport that continues to prevail all over the world, rugby. The Rugby World Cup (RWC) is like the super bowl of rugby and it brings in profits just like the super bowl does. Capture rugby.PNG
The RWC is viewed all across the world broadcasted in 207 regions and with an ability to reach over 4 billion people. Not only is it a largely viewed event it is highly attended almost as much as soccer events in places such as the FIFA world cup in 2002 as you can see in the graphic to the right. The RWC also has a direct impact on the country's GDP (gross domestic product).  The France RWC in 2007 is estimated to contribute £380 million(548 million US dollars)  to the French economy. The GDP shows the impact of the event in a short term but long term the country gets exposure. Every Time the event is mentioned that is positive advertisement of that country. This exposure also generates more money because it draws in international companies looking to advertise, these companies decided that the opportunity cost of buying the advertisement is smaller than the opportunity benefits to be gained.
These events are very helpful economically but they also allow for a much needed advertisement of the game itself. Many people think rugby is just a violent game of tackling but it is actually about respect as well, you play a competitive game and then after you eat a meal with the other team and make lasting friends. There is however an opportunity cost on this and in this case it is money. In order to spread the game there needs to be clubs for people to play in and this means there needs to be qualified coaches and referees,  approximately  £1 million(1.4 million US dollars) have been invested in newly qualified coaches and referees. This is a growing sport, each year the RWC draws a larger international crowd  and the profits are increasing each year as well. Rugby and the RWC will continue to draw in crowds and make profit, who knows maybe one day it will be held here in the U.S.  

The Economic Impact of Rugby World Cup 2015. N.p.: n.p., n.d. Web.

Tuesday, February 16, 2016

How Low Will Gas Prices Go?

Written by: Joe Labs

How Low Will Gas Prices Go?

The current ‘buzz’ in the oil industry is that gas prices are even lower than they’ve been since 2009. The world currently is in abundance of crude oil, with enough extra produced to power Britain last year. Research has shown that until the glut--an excessively abundant supply of something--shrinks. With the excess amount of crude oil, it has driven the gas prices down to historic levels, which has in return has consumers paying less for gasoline than they would have before. “The current nation wide gas cost is at $1.54, which are the lowest that prices have been since 1998. Ten states currently have averages under $1.50 per gallon, and the national average could drop between 10 to 15 cents more within this month” (Addady).

As stated previously the decline in gas prices is a result of the crude oil barrel prices significantly dropping. As of this month prices of crude oil per barrel is $28, which is a 70% drop in price over the past 18 months. If the crude oil price per barrel drops below $15 we could possibly see gasoline below $1,00 per gallon, and that would be the first time since 1998 that prices would have dropped that low. The overall price of gas/oil has been dropping for the past three years now from just below three dollars now down the almost under a dollar fifty. Recently within the past two years the supply & demand haven’t been even. There has been more supply for oil than the actual demand  by the consumers.
Even though the consumers benefit from the low prices of gas, this decline in cost isn’t the best for everyone. “For starters, oil-producing countries and states Venezuela, Nigeria, Ecuador, Brazil and Russia are just a few petro states that are suffering economic loss” (Krauss). With sanctions placed on countries like Iraq, their oil production have been cut, by about one million barrels a day in recent years and it has blocked Iran from importing the latest Western oil field technology and equipment. Also bigger oil companies such as BP and Chevron have “announced from this reduction in oil prices that they will cut their payrolls to save cash, and they are in far better shape than many smaller independent oil and gas producers that are slashing dividends and selling assets as they report net losses” (Krauss).

So, the main question is how low will the prices drop and how long will they stay there for? Some may be looking forward to gas prices reaching just $1 a gallon, which hasn’t happened since before the turn of the century, but that prediction could be overly optimistic. Not only would the price of crude oil have to be cut in half, but gas prices fluctuate seasonally, and they generally rise by 50 cents per gallon or more in the spring as refineries conduct maintenance. Overall, the prices of gasoline aren’t expected to drop until a dollar nationwide, but in some areas of the country you may see prices under the dollar per gallon marker. These prices are expected to stay under two dollars for the remainder of the year, with prices expected to increase during the spring and summer seasons, then prices falling after the summer is over.

Works Cited

Addady, Michal. "This Is What We Can Expect From Gas Prices in the Next Few Months." Fortune. 11 Jan. 2016. Web. 15 Feb. 2016.
Krauss, Clifford. "Oil Prices: What’s Behind the Drop? Simple Economics." The New York Times. The New York Times, 09 Feb. 2016. Web. 15 Feb. 2016.
Parietti, Melissa. "Projected Gas Prices for 2016 | Investopedia." Investopedia. 17 Nov. 2015. Web. 15 Feb. 2016.
Russell, Karl. "Why Oil Is Plummeting." The New York Times. The New York Times, 10 Feb. 2016. Web. 15 Feb. 2016.

Thursday, February 11, 2016

Super Bowl Sunday

By Gabby Amini

With the Super Bowl having been played earlier this week, the host city then tries to predict how much money they raked in through hotels, restaurants, the game itself, etc. Every city that hosts the Super Bowl manages to spend some of their taxpayer funds in costs associated with the game, which results in a bit of controversy.
Although most costs are covered by the NFL, the rest is a small price to pay for hosting the world’s largest sporting event. Through various leisure activities, such as dining at restaurants and merchandise spending, the Super Bowl has a large impact on these small businesses. Those who attend, usually find themselves sleeping at a hotel or some sort of rental for the weekend, which then again rolls in dough.
The sharing economy will benefit from the Super Bowl, and people that participate with companies like Uber and Airbnb can expect to see a spike in sales when the Super Bowl comes to town,” says Carol Roth, a small business expert.
But the impact is really not as big as it seems. When one looks back at the actual data, we don’t find bumps of hundreds of millions of millions of dollars, really when an economists looks back, they find an increase of economic activity of $30 million to $120 million. Firms and Super Bowl host committees, however, annually release huge estimates for what the event might bring to the local economy.
What the Super Bowl really does is cause places to fill up much more quickly. Suddenly hotels that are usually not so crowded become completely sold out months in advance. Every activity gets racked up, whether it be restaurants booked, car services, catering and event locations.
The idea of hosting a Super Bowl has been used really as a bargaining chip when it comes to stadium negotiations between the NFL. Cities are encouraged to maintain modern stadiums and are often then awarded with hosting rights shortly after they agree to build or renovate the team's stadium. In this, so much money is lost for the project, but then gained back after hosting.
“Local host committees often commissioned studies, we do not,” says NFL spokesman Brian McCarthy. “There is no doubt that the Super Bowl provides direct and indirect benefits to local communities from the influx of visitors to the area to the dozens of charitable and legacy events that have impact long after the game is done.”  
In 2003, a fellow sports economist Robert Baade published an analysis of the economic impact of every Super Bowl from 1970 to 2001. He found the game generates an average influx of $92 million, a benefit but far below some estimates that round around $300 million.
“You can probably come up with the high numbers if you count all the people that were there (in the host city), and all the money they spent, and if you assume that everyone who was going to be there anyways was still there and had no problem finding a hotel room and if the multipliers stayed the same and there isn’t money being sent back to corporate headquarters.” Matheson said.

Barrabi, Thomas. "What Super Bowl 50 Means For Host Cityu0027s Bottom Line." Web. 09 Feb. 2016.

"Here's How Much Hosting the Super Bowl Is worth." CNBC. 2016. Web. 09 Feb. 2016.

Should we raise Minimum Wage to $10.10/hour?

Parker Hutjens
Economics - B3
February 9, 2016

Should we raise the minimum wage to $10.10/hour? Explain

There is a huge debate on whether the government should increase the minimum wage to $10.10 or if they should keep it the same at $7.25.  Many jobs are starting to increase their minimum wages as a company but a good amount still start employees at minimum wage.  Minimum wages should be increased to $10.10 nothing less for multiple reasons.  The cost of living is very expensive and with making minimum wage it is almost impossible to be able to live on that.  Also increasing the minimum wage would help decrease the amount of taxes we pay because this raise would have less people relying on social services.  Lastly, raising the minimum wage would help the economy recover with the money the people make going right back into the economy and to local businesses.  So, yes we should increase minimum wage to $10.10.  
Over the past 50 years the cost of living has greatly increased which makes it very difficult to be able to live on minimum wage.  The living wage for one adult is about $14.84 per hour which includes housing, clothes, food, and necessities to live.  This is over double the amount people will receive while working a minimum wage job.  Adults work on average about 40 hours a week and if they work all 52 weeks of the year at minimum wage they will be making about $15,080 before taxes which will accumulate to about $12,818 a year.  This salary for a worker at minimum wage is only $1,048 over the poverty rate.  If we decided to raise the minimum wage to $10.10, the salary will increase to $17,856 a year after taxes which is $6,086 over the poverty rate which will give the workers money to support themselves and even their children.

Aside from an increase in the cost of living, increasing the minimum wage would decrease the amount of taxes we have to pay because there would be less people relying on social services to be able to get by in life.  When people are only making $12,800 a year, a thousand over the poverty rate, it's hard for people to be able to afford bills including food, clothing, and other necessary items.  Social services, people that work at minimum wage have to often use include:  medicaid, food stamps, WIC.  Medicaid, a federal and state program that helps people in poverty pay for their medical and custodial care costs.  While, food stamps are used by people in poverty that can’t afford enough food for themselves and their children.  Lastly WIC (Women, Infants, Children), is a social service program that helps low-income women afford healthcare and nutrition.  If we decide to increase the minimum wage, the amount of people on these programs will decrease because they will be getting paid more and will be able to afford food and healthcare.  As less and less people rely on programs like: Medicaid, Food Stamps, and even W.I.C., less money will have to go into the programs which will decrease the amount of money we pay for taxes as taxpayers.  

Lastly, making the minimum wage $10.10 would help the economy recover because many would be able to afford more goods and services.  Over the last few decades economic growth has been increasing slowly.  If we decide to make minimum wage $10.10 more people will have the chance the spend and put more money back into the economy.  Doing this will not only help the economic recovery but most importantly will help increase the economic growth.  “According to the White House, raising the minimum wage would increase the disposable income of 28 million people, which in turn would boost the bottom line of businesses across the country” (Tharawat).  Having an increase of the minimum wage will have potentially 28 million people spend and put more money into the economy which will help it grow larger and larger.  

Increasing the minimum wage for all workers around the U.S help the United States as a whole in many ways.  First, the cost of living in the U.S is very expensive and when making minimum wage it is very hard to impossible to be able to live.  Secondly, if we increase minimum wages we will end up decreasing the amount we have to pay in taxes, because less and less will be relying on social services.  Thirdly, increasing the minimum wage to $10.10 would make them most likely spend and put more into our economy which would help the economy recover.  After hearing this I hope that you agree that we should increase minimum wage because it will benefit everyone.  

Work Cited:

  • "4 Reasons People Need a $15 Minimum Wage." Jobs With Justice. 2015. Web. 08 Feb. 2016.
  • "5 Reasons Why the U.S. Should Raise the Minimum Wage." 5 Reasons Why the U.S. Should Raise the Minimum Wage. Web. 08 Feb. 2016.

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