Sunday, August 26, 2012

Long Run Costs and Economies of Scale


With the invention of the internet and the subsequent evolution of all the resources which are available to us with only a key stroke or two it is hard to believe that there are still areas of which information is lacking.

The business that I would start is a not-for- profit that would assist families who have had a child diagnosed with a disability or a long term illness. My business would assist the child and families finding the resources needed for them in the community, as well as help the families understand and make the needed transition for the new diagnosis. This business would start off smaller with focusing on assisting families in one quadrant of the City of Calgary, then growing to encompass the entire City. Having a web page and using social media to be able to bring awareness for the company would be the path I would choose as a starting tool as well as a long term tool.

A third of the adult population is living with some form of a disability; the majority of these were not diagnosed in childhood. However in the past 20 years or so the medical profession has made leaps and bounds and has been able to identify and diagnosis more and more cases. The target market for the company would be the third of the population, in the City of Calgary. A need to partner up with the Children’s Hospital so that when a family receives the diagnosis for their child they are given information to contact our group right away to help with direction on getting the proper supports.

Fixed costs for our group would be website, phone line, cell phones, internet and email for the group. Short term expenses for our group would be counsellors, a small office space and mileage for counsellor’s vehicles. Long term expenses of hiring more counsellor’s a larger office space, running programs at our facility that are not offered elsewhere, and vehicles for counsellor’s to use would be the ultimate goal.

Having a grown child who was diagnosed many years ago with multiple disabilities there were no avenues available at the time to find supports in the community to help. You needed to try and search out what you could on your own, which is what I did; it was a very long and frustrating road. In speaking with a friend for this article that has a child with a disability she told me about Children’s Link (www.childrenslink.ca).  I went to the website and was very impressed with all that this organization has to offer to its clients, from finding out the diagnosis all the way to transitioning to adulthood and independence for the young adult. I am sure that there will always be room for another group to work in this area, with the number of children being diagnosed with disabilities every year the work load is heavy.  

Friday, August 24, 2012

Law of Diminishing Returns


The law of diminishing return is a decrease in the marginal output of the production process as the amount of a single factor of production is increased, while the amount of all other factors of production stay the same (Wikipedia) .

In Pierre Lemieux article The Diminishing Returns to Tobacco Legislation he speaks about the diminishing return of the government dollars spent on the fight to stop smoking (Lemieux, 2001). Governments have long since taxed the sinful items which we as individuals indulge in, these funds are inelastic to the government. They can raise these taxes and increase their revenues year over year.
Then a point in time came when smoking was linked to serious health problems and the social conscience was awoken in regards to governments becoming responsible to their citizens for their health and well-being rather than just to make money off of people’s addictions. The information supplied from Pierre Lemieux in his article says that cigarette prices in the United States increased by 52% from 1985-1995 during which time 18% of smokers quit smoking then from 1995-1999 prices increased 48% with 11% of smokers quitting smoking at this time (Lemieux, 2001), from this information it looks as if the law of diminishing return started for the governments with regards to the effectiveness of the use of their anti-smoking dollars during 1995.  

From the article we do not know the total number or percentage of the population that smoked in the United States during the time periods of 1985-1995 or 1995-1999. We do not know how many new smokers started each year, the length of time people smoke before they decide to quit? As well we do not know what was the deciding factor for an individual to quit? Was the advertising on the cigarette packages offensive and that was the cause for them to quit, or was it due to another factor such as their physician advising them of complications due to smoking. Without the further details of the reasoning behind someone quitting it is truly hard to say when the law of diminishing return started for the government with their anti-smoking dollars.
Myself I quit smoking in 2000 (I realize it is outside of the time used) the reason I did this is because my children were getting older and I did not want them to start smoking. All of the advertising for all those years did not impact me. My mother quit a year ago she smoked for 55 years; the reason she quit was because she ended up in hospital again with pneumonia for the second time in less than a year. It was a very severe case with her long term prognosis not know for quit sometime. Again the anti-smoking campaign did not have an impact on her quitting either.

In Pierre Lemieux article he makes the state of “or it may be that most smokers don't really see, or care about, such government warnings(Lemieux, 2001), I do not agree with this statement. All levels of government have different types of regulations and warnings to try and help us help ourselves; over and over as individuals we continue these different behaviors as we choose. The drinking alcohol and driving campaign is a prime example of individuals also not being impacted by the graphic displays of motor vehicle accidents caused by drinking and driving. My opinion is that individuals see the advertisements but do not really believe that this would happen to them until it is too late and they have lung cancer or caused a motor vehicle accident.

Pierre Lemieux spoke about mild forms of prohibition not to be discounted when it comes to smoking (Lemieux, 2001). However in the past when there was prohibition around alcohol all this did was to create an underground society which made and transported alcohol and increased alcohol consumption. The increase in demand for alcohol rose and so did the illegal making of alcohol so that supply increased as well. Prohibition was proven to not be a viable solution in the past when it came to alcohol and with the data we have from that experience this would lead us to believe that it would also not be a good solution to the anti-smoking campaign either.

What is the answer to continue momentum in the anti-smoking campaign and see government dollars used in the best way? I do not know what the answer is for a better use of the government’s anti-smoking campaign dollars and how to keep the momentum going, however social change has started and this to have a momentum that will hopefully help in assisting the anti-smoking campaign.  

Lemieux, P. (2001, Mar 19). The Diminishing Returns to Tobacco Legislation. The Laissez Faire City Times. Retrieved on August 24, 2012 from:

Wednesday, August 15, 2012

Oil & Gas Industry in Alberta



The current state of the oil and gas industries at this time is said to be in a reduced activity. Scott Saxberg President & CEO of Crescent Point said that “reduced industry activity will alleviate cost pressure in the second half of 2012, leading to improved operating costs and cash efficiencies” (Healing, 2012). However Crescent Point’s net income rose by 55% to $287 million and cash flow was up by 24% to $386 million.
With the current state of the pipeline situations with Enbridge Northern Gateway, Kinder Morgan Trans Mountain and Keystone XL pipeline finding ways to move the oil and gas to lucrative markets such as Asia is proving to be quite a challenge. The cost of moving a barrel of diluted bitumen is $7 in the pipeline, the cost of moving the same quantity by rail is $6 to $8. Rail is a form of transportation which is being looked into for an alternate source of moving oil and gas.
Oil and gas are fairly inelastic in the short term. As shown in the gas shortage of the 1970’s in the long term individuals and industries adapted and made changes to improve cars, hot water heaters, furnaces etc. as well as using technology for new sources of energy. However in the shorter term we as consumers still consume the same amount and just end up paying the higher prices.
Citing:
Fekete, Jason (2012) Canadian Newsstand Complete, Edmonton Journal, Pipeline protests spur option search; companies consider alternative routes, shipping crude by rail. Retrieved August 4, 2012, search.proquest.com.libresources1.sait.ab.ca/canadiannews/docview/1033267389/13890A6F8BA6E177ADO/1?accountid=13652.
Healing, Dan (2012) Canadian Newsstand Complete, Calgary Herald, Crescent Point aims for six-figure production; Company says income up 55% to $287 million. Retrieved August 14, 2012, search.proquest.com.libresources1.sait.ab.ca/canadiannews/docview/1033175767/1389041892E49BC97CE/2?accountid=13652.


                                                            Works by an Oil Rig
                                          http://www.energy.gov.ab.ca/NaturalGas/729.asp









Monday, August 13, 2012

Price Elasticity & Revenue

When a product or service amount demanded is determined by the price of the item that is price elasticity.
Analysts speculate that an iPhone 5 update is in the works for the fall, but along with that they are saying that apple has another iPad in the works as well. Speaking about the price elasticity of the new tablet mar-ket and how a tablet priced at the $300 mark would drive up sales in this very price sensitive market. They are saying that there is a potential of $10 billion in revenue for this new mini tablet, and that apple could take away sales from Amazon.com's Kindle.
Analysts did warn of lower revenue due to cannibalization and lower average sale prices.


 
$500
$450 x
$400 x
Price  $350 x
$300 x
$250 x
$200 x
$150 x
$100
               
10 20 30 40 50 60 70
Quantity  (in billions)

News paper article at: search.proquest.com.libresources1.sait.ab.ca/canadiannews/docview/1031141163/1388645AE76288EO134/1?accountid=13652
Ratner, Jonathan.The Ottawa Citizen [Ottawa, Ont] 03 Aug 2012: F.3
credit: Jonathan Ratner; Financial Post
copyright CanWest Media Aug 3, 2012

Wednesday, August 8, 2012

Graphing Changes to Demand

Graphing changes to demand is a constant in our world.
With the scarcity of products  and resources in our economy demand is ever changing. Living in the point and time in history that we are with the invention of computers and the subsequent computer age that has followed our lives have seen a great deal of change.
Graphing demand in the region in which you lived back at the turn of the 20th century would have been a simpler task then graphing demand in today's world economy. You would have still encountered the increases in demand however the region which you would be dealing with would have been significantly smaller.
In today's world market with the amount of products for possible purchase and consumers having higher than ever disposable income the demand is greater to have the latest and greatest items, as well to keep up with the Jones' and what they have.
Don't forget that part of the demand curve is influenced by what we as consumers believe our future income shall be. With us as students at SAIT taking classes we are doing this to increase our knowledge which in turn we hope shall lead us to better jobs which we make the assumption shall pay us more money, and in turn will give us more disposable income :) Which then we can spend, increasing our demand for products !!

Found graph at the following website:                                     
http://economicobjectorvism.files.wordpress.com/2007/07/oil_graph_1.jpg