Chapter 2 - Supply and Demand

Article: Gold to Advance on Lower supply, Increasing Demand, Hambro says

http://www.bloomberg.com/apps/news?pid=20601081&sid=am0ESKjYmsQc

Summary: This article shows how, despite a record price on November 16, gold prices may go even higher due to increasing demand and a lower supply. Although there are certain companies who are able to replace their gold reserves each year, most cannot. This is ultimately leading to a shortage in gold. This along with an increase in demand for gold products is leading to an increase in the price of gold.

Connections: The law of supply and demand is present in almost all goods. When an item is readily available, the cost of it is cheap, but when it is hard and costly to find,(like gold) the cost increases.

Reflection: Gold has been viewed as something that retains its value over time better than cash. This article further supports that by showing that as the economy worsens, more people go to gold because of its safety as an investment. Now with the economic crisis, more and more people are turning to gold instead of cash.

Chapter 1: Scarcity

Article:Record-low sockeye return expected for the Fraser River
Summary: Normally during the course of the summer, millions of salmon travel across the Fraser River. This summer, however, saw less than half of its normal salmon run. No one yet knows the cause of this low run, however they beleive the problem lies in something that happened in the ocean. Runs have been declining steadily since 2007 and 2011-2013 are all expected to be bad years for the salmon industry. Experts have ruled out the overfishing, higher temperature in the Fraser River, and freshwater survival as causes for the low run.

Connections: Scarcity is a major factor in determining the prices of everyday items such as food. When there is little supply of something, the price of the item is increased to make up for the decrease in supply. When something like salmon takes an 86% decrease in spawnning, imagine what that will do to the price! Since salmon is a raw product, it can be made to make many other foods like sushi, and since the price of salmon of so high, restaurants will have to charge more for their sushi which could hurt the restaurant business!

Reflection: I think this problem will be hard to solve since they don't know the cause of the low salmon runs so there's nothing we can really do until they find out the cause. One thing the government could possibly do is to give tax right-offs to those affected by this shortfall. Once they discover the cause of this low run, then they may be able to do more about the problem.