Economics

    Oil have been known to human being for very many centuries, the Eastern world historic literature have shown oil abundance, the Bible and the Apocrypha allude to oil exploration Noah  the legend tightened his ark seams using pitch indicating use of fluid bitumen at his time, the Deuteronomy have mentioned oil out of the flinty rock. Oil is believed to have been a major factor in the ancient Judea and Persia trade. The burning wells in Eastern nations like the wells of Baku seemed miraculous to primitive people at that time, these wells have continued to flow into this century without running out of oil or being exhausted, led to emergence of the Zoroastrians or the fire worshippers, this worship was also amongst the ancient Indians. There were also some medicinal values attached to the petroleum at the source. The Greek legends used petroleum to burn the criminals and slaves (The World Traveler 1).

    Romania is the first country where modern scientific and commercial oil lines first began across the sea, though united states is the country producing highest quantity of oil in the world, it entire the field in Pennsylvania discovery virtues in 1895. Italy was the third country to start organized oil production followed by the following countries in this order Canada, Russia, Galicia, Japan, Germany, India, Dutch East Indies, Peru and Mexico.

    Col. E. L. Drake is the fonder of the petroleum industry because he innovated better ways of mining and solve a lot of mining problems at that time that would latter make the States a rich nation. This saw the evolution of well drilling of oil, he drilled the first well near the Titusville, Pa., in august 1859. Other countries emulated the states on their late achievements especially on drakes innovations.

    The figure 1 below shows the world oil repartition, North America have evidently consumed most of its oil reserves with Middle  East having the largest of oil that is not yet explored. This brings forward the swing share idea, for some time to come they can comfortably meet the world oil demand rather comfortably (The World Traveler 2).

Yellow line reveals the world share of oil production, green highlights prices, in the year 1973 at first oil shock time share was 38, and by 1985 it has reduced to 18 because other nations had also started production. The share index is now at 30 and we dont expect this to reduce any soon because there is no country going to be a new force in mass production apart from those already existing (The World Traveler 5).

    When the U.S oil production peaked, other countries specifically got the pressure to compensate for the deficit gap created by the U.S, specifically Saudi Arabia and followed by Iran took action, they were the only countries globally that could fill up this gap in global oil production. For this to happen, Saudi Arabia had no option but to increase the oil production in doubles and volumes than it did produce earlier, this also applied to Iran (Ben 5).
    In the early 1970s there was a massive increase in global oil demand and market, the global demand of oil was only 20 million barrels per day, but ten years down the line the demand shot to 50 million barrels per day. As the U.S oil production increases to peak, the Saudi Arabia oil production was only 3 million barrels per day. This was later to be taken over by the Saudi Arabia as the largest oil producer in the world.
 Figure  SEQ Figure  ARABIC 2 Growth in Global Oil Demand. Barrels per day in millions (dollars)
 EMBED MSGraph.Chart.8 s

    The global oil demand has been on the rise with a deep in around the year 1985 according to figure 5, there after the prices have continued to increase gradually to 2000. This increase in global demand of oil is attributed to increase in growth of demand of oil products and also due to demand for power to fuel faster growing economies like china. This demand is likely to increase and will definitely see the depletion of the oil reserves. US is one of the largest consumers in the world, though it is resorting to alternative sources of energy, a number of researches are underway to find the possibility extracting liquid energy like petroleum from coal, if this comes through then it would be a new world order on the energy world.

 EMBED MSGraph.Chart.8 s     In the early 1999 the world ran out of oil leading to increase in crude oil prices from 12 to 60. Since that time the supply of oil globally has increased by 10 according to a study by IEA (International Energy Agency), in 1999 it was 65.8 million barrels and rose to 72.5 million barrels in 2004. Global oil production capacity is estimated to double by 2010 to about 16 million barrels of oil per day (www.nab.com.au).

    These increases of oil prices are due to the decline in the value of dollar and speculation, when the dollar value deteriorates then al the commodities related to it are affected directly as the suppliers look to keep their purchasing power constant. Speculation is also another phenomenon which is rather complex, the higher the uncertainty levels in the market the higher the levels of speculation in the oil market. Speculation obviously leads to various activities in the oil market for example hoarding of the oil which automatically leads to price escalation.

    Another factor leading to oil price boom is the increase in its demand by the fast growing countries like China, Brazil and India. Speculation in even higher growth in these nations including U.S has led to price increase and fueled by the problems of supply by suppliers like Nigeria, Russia, and Venezuela. Price increases are directly caused by the shortage of oil from the major oil producing nations.

    Shocks in oil prices have global stagflation effects on basically on the oil importers because it slow the growth rates and cause recession through reduced production levels leading to increase or a shoot in the prices of almost all the commodities and hence inflation in the said country. These effects size varies according to a number of factors the oil shock size, persistence of the shock, the level of oil dependency and energy in the country and the policies in place on monetary and fiscal bodies.

    OPEC foundation lead to oil decline in member countries in 1979 to 1980 purchasing power per barrel reduced. Arab exporting states introduced the Arab Oil Embargo in 1973 on U.S and other states supporting Israel leading to 400 price increase of oil in just six months. Price increases between 1979 and 1980 are also attributed to the Iraq-Iran war which doubled oil prices during the period. These high prices led to the non-OPEC producers which led to lower demand of oil in the OPEC organization member states hence plummeting of oil to record below 10 a barrel. These prices shot up again due to the Gulf War when Iraq invaded Kuwait. Between 1990 and 1997 the global oil consumption increased turning the price cycle up. The US economy was stable and strong and a boom in the Asian Pacific areas.

    WTI (West Texas Intermediate) prices and Bret have fluctuated around  70 per barrel in July 2009. In august the prices rose by 11 in monthly average figures. Non-OECD Asia consumption increased led to EIA (International Energy Agency) to review their forces for global demand 2009 and 2010. Despite this volatility the Chinese import of crude oil has increased over this year which is attributed to increase in operation in domestic operation and continued oil strategic stockpiling. With such expected continued increase in china growth, we expect similar trend in the coming the years 2010 through to 2011 as long as this growth continue.
    IEA have revised to higher scale 2009 non-OPEC supply by 160kbd because of high levels of unexpected activities on US and Russia which improved the production. There was a remarkable increase in oil supply because of increase in the production capacities in these non-OPEC countries
Figure  SEQ Figure  ARABIC 5 Long-term and short-term aggregate supply of oil

    Inflation and oil prices have clear relationship, oil price increases causes short term aggregate supply to shift inwards putting pressure on price levels upwards in short, sharp increase in crude oil price leads to exogenous inflation , the impact felt is great when the nation is big oil importer, has several industries depended on oil energy in their production processes. There are factors that come in which may eliminate inflationary shock, lets take into consideration the high crude oil prices impact on aggregate demand. First inflation acts increase to decrease real incomes growth reduces pressure on demand by the consumers (AD Main component). Low demand growth, high levels of input costs (which pressures profit margin of a company) results to reduction in planned spending on investment (Ben 11)

    The monetary policy should respond to escalating oil prices by reducing spending through raising the short term interest rates. But tightening the monetary policy will result to increase in unemployment, reduced economic growth levels. Deflationary policies will consequently decrease the GDP, and if the slow down in production leads to recession the oil demand will decline as a result putting pressure on global oil prices. (Victor  James 7).

In the globalization era, financial and economical policies are interdependent on the developed and developing countries. Even a slight change in the economic polices of one country might have a major impact on the other states. Tackling the economic growth with forceful action on both the financial and macroeconomic policy fronts is the need of the hour. Policymakers must be mindful of the cross-border ramifications of policy choices. 

Macroeconomics identifies the driving elements behind the loose monetary policy. It foresees what the popular definition fails to do. Decline in demand is considered as a core force for recession. Aggregate demand is not fixed it can only be measured by means of prior production. The important factor that misleads producers regarding the conditions of the market is central banks easy monetary policy which leads to an artificial lowering of interest rates.

    Central banks easy monetary policy is one of the important misguiding factors for the producers by artificially lowering the interest rates. It gives wrong market scenario on which the producers relay on. This leads to activities which are away from the reality in turn leading to economic boom. Producers, commit mistakes relying on easy monetary polices misreading the market conditions. Loose monetary policies once tightened revels the correct picture of the market that spells out the factors for loose monetary policies on which measure are taken by abandoning the previous policies there by economic burst occur. When the central bank tightens its monetary stance it gives rise to liquidation due to the errors committed in business because of prior easy monetary policies.

Central Bank Monetary policy is the driving force that creates bubble-burst error in liquidation process, business that leads to recession. By looking in to the central monetary policies we can make know where the economy is presently placed in the bubble-burst. The extent of business errors is an indicating factor to differentiate whether it is an ordinary recession or a depression depending upon the boom of the economy. If the boom is longer the bust will be severe.

The negative implication for real pool funding is by increasing the money flow that gives rise to interchanging of nothing for something which in turn weakens the real saving and reason for underestimating the real pool of Injections. Important factor driving factor for bank lending is liberal financial markets and removing restrictions.

There are two bubbles recognized as of now in the economic perspective called asset-price bubbles can be divided into two types. The first type is credit boom bubble and the second type is known as pure irrational exuberance bubble. The first type is very dangerous and this occurs when structural changes and lively expectations occur in financial markets and this leads to a credit boom. The first type is very dangerous and this occurs when structural changes and lively expectations occur in financial markets and this leads to a credit boom. This loop involves in easing of credit standards and increasing leverage. The second type is not so dangerous because it does not involve in leveraging against higher asset values. The bursting of the bubble without the credit bloom does not cause inflation. The first one is the result of the structural changes in the financial markets and the over estimation of the economic prospects.

The major cause of present financial crisis is large scale housing boom and bust that resulted in the financial turmoil in U.S. It in turn affected most of the nations all over the world in the form of rescission. The range of rescission effected nations depending on the financial and economic policies existing at that time. There is a lot of difference in the economic policies and its effects on the developed and developing countries.
Condition of emerging states in economic front

Emerging market economies are that state which consists of low to middle per capita income. Emerging markets are those states which restructure their economies according to the market-oriented lines and recommend riches of opportunities in technology, transfers, foreign direct investment and trade. The important objective of the monetary policy is interrelated with current account equilibrium, price stability and exchange rate stability. The five biggest emerging economies are India, Indonesia, China, Russia and Brazil. The global economy is at a dangerous juncture. The credit crisis in most of the developed market economies are even more prompted by the persisting global imbalances, declining value of United States dollar, continuing housing lump and soaring oil and non-oil commodity prices increase risks to economic growth in developed economies as well as in emerging economies. The main cause of inflation around the world is increase in the commodity prices since 2007. The other factors include higher wages and excess capacity utilization. In addition to this, many countries could not understand whether to accept measures to control inflation or strengthen economy through fiscal and looser monetary policies. The emerging economies like china suggest looser monetary policies to ward off deflation and to guarantee powerful economic growth.
Advanced economies are already facing the recession problem. The mixture of negative growth and financial stress in advanced economies is escalating emerging market economies like Jamaica which require maintaining access to capital markets. The emerging market countries and the central banks in advance are taking steps to ease monetary policy as the inflation is receding. Many people think that loosing monetary will have drastic effect on the economy of emerging states. There is a well known asymmetry regarding monetary policy which plays a vital role and needs to be taken in to account. When the real economy of the state is growing quickly, tightening monetary policy with higher interest rates raises the cost of capital and this decreases the motivation to invest and thereby acts as a brake. But when the economy is stalled, loosening monetary policy does not eliminate the uncertainty which the firms are facing regarding the investment decisions. Therefore, looser monetary policies with low interest rates may not essentially act as accelerator. Until the primary underlying engines of economy start to put forth a pull, looser monetary policies have only limited effect on the economy of emerging states.

Loose economic polices by emerging states
The emerging economies has tightened polices to control inflation and incoming capital flows. Some of the emerging nations took measures in that process. As a whole the emerging state economies are affected by loosening monetary policies.

Emerging nations are going to be benefited from factors like least interest rates which help capital to flow into emerging world. Besides this, currency appreciation is an important question to the emerging economies due to high capital outflows. For example, Brazil has enforced 2 IOF tax on foreign capital inflows turning into fixed and equity income with the exception on Foreign Direct Investments.

Chinas monetary policy will continue to be tight but may be attuned according to the changes in global economy. US sub prime did not cause china to loosen its monetary policy for the reason that combating rising inflation continue to be a priority for economic planners. On the other hand, the Central bank would pay attention and amend policy according to the international and domestic situations. China could loosen its monetary policy to counter balance the depressing impact of global economic decline on Chinas growth. Some of the bond traders held that the central bank has eased its policy, permitting additional liquidity to stay in the domestic money market.

U.S and Europe is not effecting to the loose monetary policies rather only the emerging states are effecting. The present issue is how U.S is benefited by the loose economic policies of emerging states despite of their central banks is unable to tackle rise in inflation and incoming capital flows. In fact this may cause potential harm to them rather than good to their economy.

Reasons - Why loose economic policies effect emerging economies more
Inflation is becoming high as the monetary conditions are too loose in emerging economies. And also because people in the emerging economies spend most of the income on basics and so the prices of food, fuel and all the other essentials increase accordingly. This is not totally because of the loose monetary conditions but it is the result of the sequence of previous monetary policy decisions. The majorities of the high inflation emerging economies either rise to the level of dollar or get involved heavily to handle their exchange rate against dollar. There is great emerging market inflation of in 2007 and 2008. The Argentina, Russia, Gulf, Hong Kong and China and even others are trying to conclude whether the increase in inflation replicate increase in commodity prices or improper loose monetary policies.

The main difficulty for the emerging country which led the global recovery to execute an exit strategy is the weak US dollar current and loose US monetary policy.  Too early exit will delay in adopting exit strategy and render emerging economy to double-dip in global economy.

To fight the crisis and to combat on stimulating domestic growth, the international community should have a serious discussion about how they are going to cooperate with each other since no country can extract itself from global growth trend.

Chinas economy grew 8.9 and it is expected to show double-digit growth in the fourth quarter. The extreme loose monetary policy can fuel tentative investment in emerging countries property and stock markets. Inflation is not an instant result in China but the policy makers are paying close attention on the risk of asset bubbles. The rich economies have to suffer with deflationary pressure while the emerging economies are thinking how to remove incentive measures before inflation returns.

Very loose monetary conditions will cause rise in inflation. During the period of 2003-07, there were imbalances in housing, financial and commodity markets due to the loose monetary policies.

Loose monetary polices can only fetched the emerging states satisfying the short-term goals but in long run they will help the developed nations more. This should be revised by the policy makers and make sure that the policies are tightened and will benefit emerging nations more in future.

The article I chose, titled Toyotas Big Recall Unlikely to Quiet Critics, is an article relating to consumer welfare. Because of problems in sudden-acceleration, Toyota has announced to recall a number of 3.8 million vehicles. It is one of their strategies to silence controversies and critics. A number of complaints of sudden-acceleration have been dismissed by the company saying such happened due to the drivers fault. The welfare of the consumers is greatly concerned in this issue since Toyota is topping the list and beating other car producers when it comes to sales. Reports of sudden-acceleration which resulted to a deadly accident in California are one of the factors that pushed many car safety critics to do something for the protection of the consumers.

As a company producing an output that is needing safety by humans, Toyota should have further developed a more extreme quality measure in identifying failures and mishaps of their products rather than just innovating their products features. This article is relevant to consumer welfare because lives are endangered despite a good amount is paid to the company for their safety in using their cars. This article allowed me to further digest the importance of the consumers safety when a product is released in the market. Consumers are the reason why a demand is created and profit is generated to a firm. Therefore, the consumers deserve a just return of their moneys worth from purchasing a product or a service. The appraisal of economic outcomes, institutions and processes is used by the author of the article as philosophy. The author, Joseph R. Szczesny, presented the consequences that Toyota may undertake. If quality and safety issues will continue, Toyota will lose the trust of the consumers, thus making a huge decline in their profit for their products. If they dont settle the issue by not recalling the vehicles, the consumers will start to be dissatisfied by the kind of service and dedication they provide to their buyers. Since they settled the issue by recalling the vehicles, it will create a big expenditure for the company.

Therefore, to maintain the car companys reputation, they have to pay a big price. Toyota will lose its value if errors and quality mishaps such as this will continue to pursue. Total Quality Control should immediately be imposed in the production process. In addition, their must be zero percent failure of the product when they release it for selling. The issue of Toyota is micro economic. It is because the issue is within the firm. Though it involves a lot of outside factors from the firm, the root of the problem came from within. The author concluded by saying that the car company was planning to a 1 billion budget on incremental production, advertising and incentives. Toyota, who has seen 28 of their sales in the fall of 2009, said that one cannot save their way through recession, you have to sell. The author left a question asking if the consumers still want to buy.

    As to whether the consumer would still want to buy, it is indeed a big question that the author wants the people to ponder. The issue caused a big damage to the company. There may still be loyal Toyota consumer buyers who were satisfied with the product offered that will still continue to buy from them. But for many of the life-conscious citizens, they might think twice in buying a car from Toyota. Toyota, for me, has handled the issue well since they took the responsibility of recalling and replacing the defects of their products. In the future, this will again generate trust to the consumers because the company didnt abandon their responsibility to their buyers. For now, there might be decreased revenue but in the future, Toyota will surely revive the lost trust from their valued customers. Toyota is a company who believes in continuous improvement. Surely, the company is now thinking and doing ample measures to further better their product and services.

Ever since the raising of global consciousness on global warming, it has been a continuous trend for industries and consumers to recognize the importance of green technologies. In fact, aside from global warming, other factors such as environmental awareness, cost implications, and even the reduction of over all pollution either in developed economies or further growth in developing countries has played a major role not only in policy in government but also in private industries.

Transportation, as is evident from the various research and studies that have been gathered in this paper, is one of the most significant contributors to the steady increasing rise in problems in the environment  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID276 (Heald et al., 2003). Environmentalists and environmental economists have continuously pointed out that the problem of greenhouse emissions from transportation -- either in the public or private field -- is an issue that must be addressed the soonest time possible.

As a result, over the past few years, because of certain economic trends that have popularized this issue, consumers, public policy makers, and even private firms have reacted to such modern issues through the creation, implementation, and distribution of hybrid vehicles. Interestingly enough, as with any action that has to do with various interactions of the market, economics and the various disciplines that fall under it have a significant contribution to the study of hybrid vehicles in the United States. Specifically, because the research paper is approaching the problem from a democratic and free market approach, the issue of the factors affecting the demand for such hybrid vehicles became an important study which would be able to generate other implications and future actions both for consumers and private enterprises of such action. This paper would therefore revolve around the concept of the demand for hybrid vehicles in the United States -- both in theory and in application -- and be able to generate a conclusion that would be suitable to the problem that has been addressed.

As with any properly constructed research in the field of economics -- and in that case any scientific field -- the first order of business is to identify the problem of the research. For this specific study, the problem would be what our various factors affecting the demand of hybrid vehicles in the United States. This general problem, although broad, captures not only the analytical concepts that would be used in the paper but also the various specific approaches and steps in order to arrive at a solution and conclusion of this report.
First, it would be the task of this paper to able to highlight the objectives, significance, and theoretical methods that would be used to answer the question. After it has done so, it would proceed by providing an extensive literature review on the various significant factors that would be important in the methodology and the analysis. After the said literature review, the paper would proceed to the actual methodology of the report that highlights how the research problem and the various objectives would be answered and achieved respectively. In order to do this, the paper would be using both qualitative and quantitative techniques of analysis.

The last section of this paper would be to provide the various results and implications of the various data that had been gathered as well as the accompanying analysis that has been made. Following it would be a conclusion and a summary of the various important points that has been generated by the research.The objective of this paper is to be able to identify the various critical variables that would significantly affect the demand of hybrid vehicles in the United States. Also, another objective is to have a complete an exhaustive discussion on the subject from the point of view of economics and the relevant science is involved that would eventually come up in such discussions. As has already been pointed out earlier in the beginning of the research, the study could be pointed out to be extremely significant because of the fact that various modern social variables such as environmental awareness, cost implications of fossil fuels, and a host of other factors has led to development of hybrid vehicles. Its distribution has been hailed in many countries -- specifically developed countries and economies -- around the world today but is significantly recognize in the United States because of its ability to produce and manufactures such vehicles, as well as the indicated desire by consumers to carry out individual production functions in a socially and environmentally aware manner while at the same time still follow utility maximization theories and minimization of costs -- factors that would be discussed extensively in the literature review section of this research.

However, it is here where we must point out the essential approach which is the theoretical and analytical framework that would be used. From an analysis point of view, because it is the factor of demand, the framework that would be used is the willingness to pay of consumers in the economy for such hybrid vehicles. In the study of economics, demand is basically captured by the two-dimensional willingness to pay locus of points which is then created by the various variables affecting it. This theoretical framework, although can only be used in a partial equilibrium setup of the perfectly competitive market economy, would nevertheless be an important aspect of the present and future research -- as well as answering our questions -- because it would be able to identify through qualitative and quantitative means significant factors that affect such demand. Other frameworks in other science disciplines in measuring demand make use of non-parametric tools of estimation. Although such methods could also provide valuable insight, we would be limiting this study to demand from the point of view of economic estimation because it is the issue that we would like to address in the research. This theoretical framework of demand side economics through willingness to pay estimation of variable significance, as would be seen, has been used in a number of other products and services in the past and present and would be a reliable methodology to highlight.
Literature on the subject reflects that in the United States, one of the most significant economic issues that are faced by regular consumers today are the prices of transportation derivatives such as fuel prices and oil. In fact, such sources have pointed out that this issue does not only come from certain population demographics that own private vehicles, but also from the public sphere as well because transportation costs are significantly affected -- in fact first and foremost affected -- by such fossil fuels and gas prices. In a study that was published in 2001, it has been indicated that in the United States, although greenhouse gases as well as sustainability of agriculture and forestry playing important environmental rules on the public opinion, there is still the tendency of the general consumer population to go back to cost reduction in day-to-day expenses -- going back to gas prices and transportation costs  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID15406 (McCarl  Schneider, 2001). In another study that was published in 2005, furthermore, authors have reviewed the possibility of making use of such negative externality in order to boost of government revenues and make government responsible for the correction of such externalities and problems through the proposed gasoline tax  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8173 (Parry  K. A. Small, 2005). However, even though there have been high willingness to pay of consumers for such taxation and externality direction by the government, there were also accompanying problems with the proposed solution such as the problem of other states not having a high enough willingness to pay for such corrective measures and even problems relating to the mistrust of other sectors of the population is not allocate indirect amount of correction enough for cost implications for the end consumer  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8173,position2 (Parry  K. A. Small, 2005).
As a result for such indicated problems, together with modern innovations in fuel economy as well as the various incentives that have been promoted to researchers regarding the development of the close that would not only be environmentally safe and productive but also efficient from the cost perspective of the general public, hybrid vehicles have been developed both by public and private researchers -- researchers at usually belong to automotive manufacturers -- to continue such development projects. As early as 1997, a research article had been published on the various systematic designs of electric and hybrid vehicles that could be probably use in todays modern organized economy  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID10128 (Ehsani, Rahman,  Toliyat, 1997). Although this paper would not anymore preferred to delve into highly technical details, it would at least be useful for the researcher and the reader to understand that there have been many problems that have been encountered by scientists developing the said new technology from the standpoint of the necessary costs required not only to produce them but also for consumers to maintain them ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID2344 (Schouten, Salman,  Kheir, 2002). As a result, there is also extensive literature that has been uncovered on the subject of individual agencies -- both interested in profit maximization and in the public good -- creating various economic projections and models on the sustainability, profitability, and cost implications of hybrid vehicle use in the United States. Any study that was published as early as 1999, various researchers had tried to simulate the use of electric and hybrid vehicles on various configuration possibilities in order to make it cost efficient. However, again, the problems that the researchers had eventually met is that because of the high expense that is required not only to purchase the Beatles as a form of overhead cost but also in the day-to-day maintenance of running those vehicles as a form of variable cost, consumers would probably not be willing to pay for the purchasing and even operation of such vehicles  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID14323 (Rizzoni, Guzzella,  Baumann, 1999).

However, one must remember that technological advancement and improvement -- even in the realm of transportation and not only in consumer electronics -- follows a geometric rate of growth and progression associated to the Moores Law of the doubling of technological growth every few months. As opposed to other literature indicated above the high inefficiency of electric and hybrid vehicles in the United States, modern literature has pointed out that because of developments in the technology, it is now equally competitive to purchase and operate such hybrid vehicles at the same -- or even sometimes significantly lower prices -- as traditional vehicles  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9867 (Ehsani, Emadi,  Gao, 2009). Although it has been proven that systems that run completely on electricity may largely be inefficient to the general public because a number of other factors pointed out by accompanying literature, a hybrid solution would be efficient because of the modern energy management systems as these vehicles that would be able to balance fuel economy and energy use  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9222 (Moreno, Ortzar,  Dixon, 2006).

From the point of view of economic theory, when such a technology exists and finally enters the market -- a kind of technology that is more efficient not only from an environmental perspective but also from a cost perspective -- then such economic models claim that consumers would of course absolutely shift to such new technology. However, researchers on the subject have pointed out that this is not the case and there are still factors affecting both the level of demand and the elasticity of demand of consumers for such hybrid cars in the United States  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID117 (Higgins, Matthews, Hendrickson,  M. J. Small, 2007). In fact, other researchers have already made use of a methodology where in the dominant variable of gasoline crisis in the modern age, even though it is still high as compared to electric vehicle and hybrid vehicle consumption, had been applied and discovered that this was not the only factor affecting the demand for such vehicles in the United States -- although as we would discover later it is a significant variable indeed  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID5535 (Beresteanu  Li, 2008). There are many other various literature available on the subject. However, for the sake of brevity, these are the essential ones that have been uncovered by the research and would aid greatly in the development of both the methodology as well as the analysis of the problem in order to meet the objective.
The hypothesis that would be offered by the research, because it is mainly in economics and statistical problem, is that whether or not various indicated variables have a significant effect on the demand of hybrid vehicles in the United States today. This is the only hypothesis that would be used in the research. However, remembering that by saying various variables, theyre actually many hypothesis that must be tested. Statistical techniques on the subject would be discussed later. However, for now, it would be wise for the research to indicate the hypothesized variables for statistical testing before the actual methodology is introduced.
Gasoline price is the first variable that must be taken into consideration. In economic theory, substitute goods would significantly affect the demand of a product. This is represented by either an upward or downward shift of the theoretical demand curve. Gasoline would be able to shift the demand curve of hybrid cars upwards if the price of gasoline is high, and shift the demand curve downward -- at least in theory, something that the statistical test would use.

Price of these vehicles -- both overhead and variable -- would be another variable that would be taken into consideration in hypothesis testing. If the prices of either the overhead or purchasing costs of these vehicles are too high, or if the price to maintain it is too high, then it would also shift the demand of these vehicles downward. The same would be true to the contrary. However, such a relationship would also be tested more rigorously because there could be an instance where the price of the overhead cost for these vehicles would be high but the maintenance costs are low -- such is the modern case of modern hybrid vehicles. The same intuition could also be used to the contrary.

A third important variable would be personal preferences. Although price and other market factors are powerful influencers of demand, personal preference and a utility that individuals and markets could be able to derive the consumption of these vehicles would also theoretically significantly affect the demand for vehicles in the hybrid category.

The main statistical tools and methods that have been used by economists in order to highlight the relationship and significance of variables are the correlation and regression analysis and techniques. A correlation analysis could be able to either prove or falsify the hypothesis indicated above that each of the three variables are significant elements affecting the demand for hybrid vehicles. Although the mathematical model for correlation would not anymore be included in this research -- there are many other references in literature available on the specified methodology in its simplest form -- we could at least point out that such a method could easily be achieved by making use of statistical packages as long as there is data available on the three variables that have been indicated above. Together with recent or future data on the propensity of consumers that by modern hybrid vehicles, the study would be able to generate the set date of relationship and variable. Through the statistical technique, the research may be able to prove the significance of the variables in affecting demand.

Although not related to answering the problem and objective of the study, it would at least be interesting to note that a regression analysis as an additional tool for correlation may be able to predict the actual effect on demand when individual variables change. Again, a regression methodology is fairly simple and available in various literature on the subject. Basically, what their aggression analysis would do is to highlight a best fit the line across the data samples and correlation of the variables highlighted above -- together with the data of actual sales of hybrid vehicles today -- and generates a statistical result.

However, analyzing the factors that affect demand would only be an initial step of the research process. After the researcher has been able to highlight significant variables and underlined there is a true direct economic relationship between the hypothesized variables and the results of the demand for hybrid vehicles, then the eventual implication of the actual application of these estimates must then be questioned and be brought into the table.

Perhaps the single most essential application of this research and the evidence gathered is that of forecasting the future of the demand of hybrid vehicles. Fortunately for the study, there have already been other studies that have been made by other researchers which has actually followed the methodology indicated above -- of course including and removing some variables depending on the research question that each researcher has it forward. However, there is a common conclusion that could be found from all the research and literature gathered on the subject -- that gasoline prices, among all the other variables, is the most significant predictor of the demand for hybrid vehicles in the United States. Although the other variables of consumer preference and the price of hybrid vehicles have been pointed out to be statistically significant, there is a large scale of difference between the significance of these variables and the significance of gasoline prices. The statistical tests have shown that although there could be perhaps a 10 to 20 increase on present and future demand of hybrid vehicles if the preferences for these vehicles and the prices of these vehicles go down, there is a basic agreement between researchers that as much as 80 of the propensity and willingness to pay of consumers for these hybrid vehicles increase depending on the movements of gasoline prices. Again, we reiterate the fact that studies have already been made on variable estimation on the same problem that has been identified earlier on the research. Gasoline prices, it seems, is the most statistically significant and relevant variable both from the perspective of economic correlation and predictive regression.

What, then, because of the numerical evidence and qualitative evidence that we have gathered in the literature review, would be the implications of such findings on the future of the demand for hybrid vehicles in the United States

Remember that although traditional economic, business, and statistical analysis would probably answer that the demand of hybrid cars in the future and the forecasting of the future markets for such vehicles would probably depend solely on the variables that have been proven and indicated by their research. However, one must also remember that especially in modern economics and associated analysis of modern methods, the operations of a certain market -- in this case hybrid vehicles in the United States -- does not necessarily occur in a vacuum. There are other factors that must be taken into consideration. These factors, when analyzed, also have specific market and all its implications for the United States.

For example, even though gas prices has been pointed out to be the major significant variable in determining the future of the market of hybrid vehicles, it is nevertheless be recognized that many of todays politicians in the United States are backed up by campaign money by large multinational petroleum companies.

Discoverers and producers of hybrid vehicles are still small scale not only with respect to profit but also with respect to political scope and power and this could also be a significant factor in determining demand of the future markets of hybrid vehicles. In the long run, even if there has been extensive proof of the consumer welfare benefits that may be given by shifting to hybrid vehicles, if such companies do not yet reach economies of scale to be large corporations enough to influence political decision-making in the United States complicated political arena, then it would not have any hope against the various legislations of policymakers regarding the laws surrounding transportation. Furthermore, institutional analysis that is recently being undertaken by modern economists in understanding the operations of the modern market has pointed out that long-standing monopolies -- specifically petroleum companies -- do not only control the market through the political sphere but also through other partner organizations that have significant effect in society as well such as mass media, religion, and social institutions.

So, in forecasting the future demand of hybrid vehicles in the United States, another factor that must be taken into consideration is the ability of producers to sustain long-run profitability for these vehicles. Long-run profitability, from an economic standpoint, requires that there are large numbers of producers and sellers in the market. Because of recent issues on patterning and rights Association, manufacturers of hybrid vehicles are actually destroying their own future and markets by not allowing other organizations to develop and improve upon the technology that may have integrated into their vehicles.

And yet another factor that must be integrated into the analysis of forecasting the market for these vehicles is that there are yet other substitute goods that are being developed by the automotive industry and even small and medium enterprises that invest on other relative goods such as those of natural gas propulsion.
Even factors of public transportation of making use of light rail transit could also play a role in the future of hybrid vehicles in the United States.

Therefore, in all the research and evidence that has been gathered, it might at first seem to be extremely difficult to provide an overall conclusion on the forecast of the market. On one side, using statistical and economic methods such as the one used above in the identification and analysis of the variables, there seems to be an assurance that gas prices, when reaching significantly higher levels, would eventually result in consumers shifting to hybrid vehicles. However, it must be noted that gas prices are ready excessive especially in the United States and therefore raises the question of the other problems and variables that may not have been indicated in the traditional associated variables relating to hybrid vehicles in the country. The research may at least say that from a purely economic standpoint, crisis of substitutes would be the most significant of the three. However, it must also highlight the importance of understanding the political economy of the country to be another factor that must be taken into consideration by other research. This conclusion, although satisfactory at lease from a single perspective, would at least provide avenue for future research on the subject because it would allow researchers to integrate yet other variables that have not been traditionally made use in economics in approaching the demand of hybrid vehicles in the United States. In fact, recent developments on institutional methodology are already being made by institutional economists today in trying to integrate a game theory approach on the probability of legislation -- or in this case and scenario a specific market good -- to go through not only regulatory process but also the various social and political hurdles that it may encounter in computing for demand. This future research may indeed be valuable to contribute on the literature of the demand for hybrid vehicles in the United States

To conclude, the research has highlighted that hybrid vehicles in the United States is a possible market that could find improvement in the future especially considering the fact that there are many recent environmental variables that social groups, markets, governments, and even individuals are experiencing increasing awareness. The literature that has been made use in this paper has indicated that even though fast applications of hybrid vehicle technology would be largely inefficient for consumers, modern derivatives of the technology can be beneficial. Statistical tests that have been done by other research, also apply to this research, has pointed out that although there are many significant variables affecting the demand of hybrid vehicles in the United States, the most significant one is the prices of gasoline in the country. As a result, this would imply that in the long run, it is the crisis of petroleum and gasoline which will eventually dictate the future of the market of hybrid vehicles through addressing the market from the point of the demand.
However, the paper also extensively discusses the important issue that such a statistical model and the revelation of the significance of this statistical variable is not the only necessarily important factor especially from an economic and social political perspective. Recent methodologies in economics has pointed out that there are yet other significant market interactions that have traditionally been ignored by statistical analysts and economists but are nevertheless essential given the heavy literature and proof of burden of these second-generation effects.

Future avenues of research may include these variables in estimating the demand curves of hybrid vehicles. However, in this specific research, although the question and problem that has been pointed out above has already been resolved, it is nevertheless also important to indicate avenues of discrepancy and problems in the data set future methodologies may be able to solve.

Theories of the Firm
Firms are the wheels of modern economy. However, despite its benefits and utilities, the presence of firms is also the cause of many problems we know today. A firm represents an organization with all its complexities and barriers. In the worst case scenario, firms can be organizations that are hampering their members to obtain their goals, while in fact it was created to help people get what they need. Ultimately, intellectuals and young scholars are re-examining the justification of living in a world where firms and such complications are a way of life.
Theories of the firm are thoughts and research dedicated to answer the following questions
Why firms do exists
Why are there boundaries in Firms
Why are firms structured in specific ways
What drives differences of actions and performances of firms

Concerning the theories of firms, this paper discuss the case study on e-Bay and its dispute with the owner of Skype technology, Joltid, which asserts to be the worlds leading companies in the development of peer-to-peer technologies. The company was founded by the team who created Kazaa, a popular music download portal.
In particular, this paper would elaborate what ways does the article challenge some institutional theories of Firms Based on the evidence provided, which economic theories seem to explain best the evidence discussed in this article
Case study Skype
Firms and Increased Efficiency
The transaction cost theory stated that firms exist because there are people who have similar or reciprocal needs and they decide to cooperate and create under mutual agreement. In addition, the managerial and behavioral theory on the other hand, stated that firms exist because managers, leaders or owners are forcing their power on weaker people, so that they can have more of what they want. The team-approach managerial theory stated that managers might have their own best interests in mind, but they realize that by cooperating, individual needs are easier to reach.
Despite the differences of these theories, they all have the same root. All theories claim that by working together, they will increase the efficiency of their work, no matter whose interest in the groups minds. Within the article, it is this premise that is challenged. The article gallantly revealed its own sentiment that the formation of firms is not increasing the efficiency of work, but they are decreasing it.
The article indicated that the operation of a firm is identical to complication and costs to finance the intermediary parties that are standing between the people who are searching for goods or services and people that are actually providing them. Other reasoning stated by the article is that the formation of firms increases the relevance of agent issues, which means that once a firm is established, managers would have to find ways to motivate their employees who are taking orders from them and having less pay than them. Failure to motivate these employees will generate a decreased efficiency.

The article attempts to prove its point by revealing the case of Skype. Skype is a software application that allows users to make voice calls through the internet. Additional features are file transfer, instant messaging and video conferencing. The product has obtained wide customer base and it experienced rapid growth since launch of its service. The company was acquired by eBay in September 2005 (Biondi, 2009).
The service of Skype brings benefit to its customers and it was a highly prospective business. Nevertheless, when there are rumors that the parent company-E-Bay stated that it does not own the underlying technology, then the service lost its prominence. The writer of the article regrets such occasion could occur. The logic behind the occurrence is that Skype is beneficial to people not matter the holder of the technology and the creator. In reality however, people are not buying the function of Skype, but they are buying E-Bays brand name. This is why the writer of the article argue that the presence of firms actually mislead people from getting what they need.
This condition highlights the theory that technology becomes the key competitive advantages. Firms use electronics commerce in order to achieve improvements throughout the organization. The benefits of these improvements are better relationships with suppliers, more effective efficient operations, and improved customer service, to name a few.  The case of e-Bay that reveals the non-possessing technology of Skype decline the public beliefs on the sustainable advantages that e-Bay poses in the peer-to-peer services.
What constitute an effective corporate is a challenging issue. Referring to the definition of effectiveness, the best company is the one able to take advantage of available resource to produce the most benefits. Despite the importance of securing continuous resource flow to the company, the trick is actually more on how we manage available resources to produce the best outcome. This means that today, managers are increasingly demanded to manage corporate resources more effectively. Research and discussion about management skills and efforts of enhancing them are abundant.
Nevertheless, there are those resources that are highly valuable for firms, for instants, highly experienced managers, patents and new inventions in information technology. For these resources, firms are competing to increase their attractiveness and sensitivity, in order to be the first to gain the competitive advantage.
The actual benefit for business lake e-Bay is they must understand the opportunities that electronic commerce offers gathering intelligence about its customers and other environmental entities. The idea of recognizing customer behavior further evolves into customer relationship management (CRM).
Furthermore, the case also revealed another problem stem from the existence of firms, which are hold-ups. Hold-up is a strategy of preventing the existing contract from working by means of complaints and continuous objections, in order to direct people into negotiating a new contract. This process is considered the characteristics of all firms and therefore they are counterproductive.
In the end of the article, it is revealed that despite its argument regarding the absence of necessity in having a giant corporation name as a shelter for business offerings, the writer suggested a practical solution, which is for E-Bay to attain ownership of Skype and its supporting counterparts, so it can regain its long-time customers (Arthur, 2009).

The regression equation essentially incorporates various different factors that, in theory, should have a significant impact upon the demand for cigarettes. In accordance with the data and information provided through the application of the T-test, we can clearly judge the significance of each independent variable upon the dependent variable, which is the annual consumption of cigarettes. This brief report will principally try to relate the results of this particular regression in accordance with traditional economic theory.
Statistically speaking, the fact that the equation caters to 91 percent of the variation in quantity demanded means that the independent variables that have been incorporated in this regression analysis are extremely significant. The T-test ratio indicates that cigarette prices, advertising and both dummy variables, C and D, are statistically significant in regards to the regression. The income and cigar price variable is shown as not having a significant impact upon the annual consumption of cigarettes. This is essentially in line with economics theory because the income elasticity of demand for cigarettes is -0.09. This basically tells us that cigarettes are inferior goods, signifying that consumption for them falls when income rises. However, the fact that the value is close to zero can also lead us to the result that cigarettes can act as normal goods as well. This dual nature is primarily due to the fact that an increase in demand can result in brand switching as well as a case in which people, owing to the harmful effects of cigarettes, can switch to alternatives like nicotine patches.
Resultantly, the cigar price variable is also not statistically significant because cigarettes and cigars are not readily substitutable. This fact is also proven by the price elasticity of demand for cigarettes which is -0.29. The negative value indicates that cigarettes have a relatively inelastic demand. Economic theory also provides evidence of this in the sense that cigarettes do not have any substitutes in terms of products, although internal brand switching does occur because of price differences. Nevertheless, the annual consumption is not significantly affected by price change because smoking is an addiction and the psychological utility that it provides is unprecedented and cannot be catered for in any other way.
The value for the advertising elasticity of demand is pretty low and that signifies the fact that the relationship between cigarette consumption and advertising is not significant in the sense that an increase in advertising will not result in a considerable increase in the demand for cigarettes. Intuitively, this can be explained theoretically in the sense that cigarette advertisements are heavily monitored and are not frequently aired as well. The other factor that we must consider is that the value is an indicator of total industry demand and not individual firm demand. Therefore, the value of one single firms product would be significantly higher.
The regression coefficients for both dummy variables, C and D, are slightly correct in comparison with basic economic theory. After the American Cancer Society published its report linking cancer with smoking, the annual consumption of cigarette smoking did essentially fall because of the reduction in consumption of people who were not in reality addicted or practiced social smoking. However, the fact of the matter is that the data has been taken from the period 1947-1982 and the report was published during 1953. Hence, the period before the publishing of the report has not been properly catered for.
The dummy variable D, on the other hand, caters to a period of two years while the entire regression has been run on the basis of 35 years. Therefore, theoretically speaking, a variable with a data count of 2 years should not have a significant impact upon the entire equation.
Conclusively, it can be seen that most of the regression results can be explained through the application of traditional economic theory. However, the incorporation of the two dummy variables in regards to the impact that they have upon the overall equation, does in fact deviate from basic theoretical assumptions primarily because of data collectionmethodology mistakes.

The economic concept of elasticity refers to the change in one economic quantity in response to another economic quantity. Moreover, we are interested in the magnitude that one quantity changes in response to another quantity that it is dependent upon. This is what elasticity measures. If the dependent quantity does not vary much when the first quantity is varied, we term their relationship as relatively inelastic. When a small change in one factor creates significant changes in another, then their relationship is considered highly elastic. Some examples of elasticities include the income elasticity of demand - which measures the response in the demand of a product following an increase in income of the products market - and the price elasticity of demand  which measures the demand of the product in response to price changes.
The importance of these elasticities to the leader of the firm is rooted in how these elasticities forecast the demand for the firms product. Managers should know how their product is seen by the market and what factors will greatly increase or decrease the demand for their goods. Knowledge of these elasticity factors will also help the firm in determining how they will position and promote their product against all competing and complementary products in the marketplace.
For example, products with negative income elasticity of demand are termed inferior goods. This means that as the individual person gets more income then he or she purchases less of the product as opposed to superior goods which the public purchase if their income increases. Being aware of this could help a manager many ways. If he knows that his product is an inferior good, then the manager can then make moves to increase his products visibility and marketing efforts towards less affluent communities  communities where demand for his product is higher according to the income elasticity of demand. The same is true for the opposite case, products which are purchased in greater quantities by wealthier individuals should be sold to wealthy individuals. Products with zero income elasticity could be marketed at the same strength across all income strata. The usefulness of the income elasticity of demand is all in knowing what segments of society have higher demand for the product.
If income elasticity of demand could help in marketing, price elasticity could help in pricing. The law of demand states that all products will have non-increasing demand as the prices go up While supply and demand tells us that the equilibrium price is the best possible state since at this point, demand equals supply this is beneficial only for the market. The equilibrium price and quantity does not have to be the point at which the firms revenue on the product is the greatest. The relevant question now is this will the company make more revenue by pricing above or below the market equilibrium price If the product has relatively elastic demand, then any small change in price will result in a great increase in demand. This means that the company would have more revenue by pricing their product lower since the lower per unit revenue would be compensated for by the increase in demand for the product. The opposite is also true. If the products demand is relatively inelastic, then even if the price is increased, the magnitude in decrease of demand is less than the magnitude in increase of the price. The company can therefore feel free to increase prices since the corresponding drop in demand will be compensated for by the increase in per unit price.

LONDON (Reuters) - Africa faces a surge in cancer deaths unless action is taken in the next decade to stem rising smoking levels in a continent where anti-tobacco laws remain rare, U.S. scientists said Wednesday.
More than half the continent will double its tobacco use within 12 years if current trends continue, the American Cancer Society (ACS) said in a report which found that 90 percent of people living there have no protection from secondhand smoke.
Some African countries have introduced smoking bans but most have not, and smoke-free public areas are rare.
For the first time in history, we have the tools in hand to prevent a pandemic, Otis W. Brawley, the ACSs chief medical officer, said in a statement with the report, which was presented at a cancer conference in Tanzania.
Smoke-free public places are one example of a low-cost and extremely effective intervention that must be implemented now to protect health.
Many developed countries have tightened laws in recent years to make smoking unacceptable or illegal in public places such as bars, restaurants, offices and on public transport -- as a way to protect non-smokers and to discourage the habit.
Secondhand smoke is known to cause cancer in adults and lung problems such as pneumonia in young children.
Over the past four decades, smoking rates have fallen in rich countries such as the United States, Britain and Japan, but have been rising in much of the developing world.
The ACS estimates that smoking will kill 6 million people worldwide in 2010 and 72 percent of those killed will be from low- and middle-income countries.
In a report published in August, it said that around 50 percent of men in developing countries smoke..
Within the last year, Kenya and Niger have brought in national smoke-free policies, the ACS report said, also noting that South Africa has had anti-smoking policies since March 2007 and has managed to cut smoking rates.
But the report listed many other countries which have not taken effective action, including the Democratic Republic of Congo, Ghana, Uganda and Nigeria.
In Abuja, Nigeria, for example, 55 percent of school students are not aware that secondhand smoke is harmful to health, and only 1 percent of Nigerias population is protected by strong smoke-free laws, the report said.
Twalib Ngoma, president of the African Organization for Research and Training in Cancer (AORTIC) which is hosting the conference, said smoking was increasing because the companies which used to target the West are now targeting countries like Tanzania.
Drive from the airport and you see a lot of billboards promoting cigarette smoking, he told Reuters. There might be small warning signs, but thats not enough to stop addicts from smoking -- and anyway a lot of people cant read.
The ACS called for more African governments to introduce anti-smoking legislation, and said other measures like charging high taxes on cigarettes had significant potential to cut smoking rates. Doubling the price of cigarettes by increasing the tax can lower consumption by fully 60 percent, it said.


Studies show smoking-related cancer deaths continue to worsen in Africa due to high consumption rate and since no further anti-tobacco policies from the government are being imposed to its constituents.  It has called the attention of American Cancer Society (ACS) to appeal for African government to cut the latters alarming growth rate of consumption, and of second-hand smoking as well, primarily by increasing taxes on cigarettes like doubling the price of cigarettes to greatly lower consumption rate by 60.
Taxes on cigarettes have been commonly used by states across the world for income-generating purposes.  But in recent years, charging higher taxes on cigarettes is used extensively in reducing cigarettes consumption due to health risks and abusive uses evident to active smokers, along with the negative effects to second-hand or passive smokers, as proven in the present situation in Africa where cancer deaths predominantly threatens the natives, and possibly become pandemic without proper precautionary measures.  Whatever motives a government has, with the study on price elasticity of demand of cigarettes, government can be able to determine the amount of tax increment to be charge per unit where companies can still operate on a reasonable market price and objectively reduce smoking. 
Price elasticity of demand measures the sensitivity of demand for cigarettes, like any other goods, after a particular change in its price.  With the basic principles of PED, products are elastic if minimal change in price results to drastic change in the demand quantity, these include  necessities and easily accessed products in the market while for inelastic ones, change in price affects only an insignificant change in the demand quantity, these goods consist of necessities, and no substitutes at hand.  In the case of cigarettes, demand is viewed to be more inelastic than elastic, despite its non-necessity and easy availability attributes, because of smokers habitual consumption and no other substitutes, even alcohol or drugs, can replace its incomparable benefits among end-users.
Being inelastic in nature, smokers are willing to buy cigarettes at any given price and in effect, cigarette firms raise its prices at extreme levels to gain bigger margins.  This is illustrated in Figure 1 graph below when producers significantly increase cigarettes prices (from p1 to p2), there would only be a slight decline on the quantity sold (from q2 to q1) which refers to the consumption rate of cigarettes.  However, the government still manipulates the pricing policies of manufacturers through imposing higher taxes on cigarettes, rather than let the latter take advantage on the price insensitivity of its consumers.   With this higher taxation rule, companies are forced to drop current ceiling on their selling rates, and may pass the additional costs enforced by government to consumers (technically termed as shifting the burden of the tax). As depicted in Figure 2, while demand for cigarettes is shown to be inelastic, excessive taxes add up on costs of cigarettes (p1 to p2), such increase in price results to a rise in supply as well (s1 to s2).


    However, government must be cautious in implementing higher taxes because it might hurt the tobacco industry if excessive taxes would mean additional costs and product demand will totally diminish in due course, despite its inelasticity side because of some factors such as disposable incomes, economic status, and time.  Rich countries and individuals with high disposable income are usually less responsive to changes in prices, compared to poor ones since their purchasing power is very low. With the poor economy in Africa, government must be really prudent in applying tax increases amount, because decline in consumption rate might eventually lower or lose the demand at large, where government revenues from import duties and excise taxes could go down in effect.  Likewise, increasing taxes could also be more discriminatory and disproportionate to earnings of the poor inhabitants, a concept of tax regression, where they pay more of the tax out of their low income unlike with high-income countries or individuals which are hardly distressed of such increases.  Also, cigarettes demand tends to be elastic in the long run, when consumers find it hard to cope up with rising costs after tax increases.  Other important issues consequential to tax increases that government should anticipate is the emergence of smuggling and bootlegging of cigarettes in the black market that could badly impact on government funding and cigarettes industry while consumers, especially the low-income groups, would shift to alternative markets offering cheaper items, normally goods traded illicitly and do not comply with taxation laws.

According to world economy statistics, Canada is rated as the tenth largest economy globally. Canadas per capita income is mainly boosted by the production sector but for the past few years Canadas good performance as compared to other countries in its peer group has declined. In the 1970s, its GDP per capita was gauged to be around 17,812, the fourth highest in the peer group, recording a B grade. The country worked on retaining this grade the following decade but it slipped into a C rating on average between 1990s and 2000s. On contrary, other countries in the peer group recorded a slip in their grades at the same time. However, this didnt mean that its per capita income was in decline. Relatively other countries like Ireland started pulling ahead of the pack shoving past Canada and narrowing the gap between the peer countries (Sherman). Countries with a lower record of income levelsneeded much more income to sustain their growth and to level with superior economies. 
Canada has a well developed agricultural sector that is rated as one of the worlds best and exports the agricultural products consisting mainly of wheat and various types of grains to diverse countries. The major importer of such agricultural products is the U.S although it exports to other European and East Asia countries. The agricultural sector was severely affected by the world recession and led to the decline of the countries GDP level (Sherman). On the other hand the Iris economy does not rely so much on the agriculture as was the case in the previous years, but now greatly depends on the industry and services sector.
Until recently, Ireland was the success among these countries. While Ireland currently ranks last on the overall economic performance list, one should not forget the fact that Ireland miraculously transformed itself from being among the poorest countries in Europe to the top best performers. After being rated as a D performer between 1970s, 1980s, and 1990s Ireland managed to climb up the ladder to a B grade country, propelling it to become one of the top three fast growing economies in the world. In the 1970s, the Gdp per capita income for Canada would double that of Irelandrelatively, by the year 2007 Irelands income per capita exceeded Canadas by US5,000 although the gap slipped to US3,700 in 2008. Lower labor economy and Irelands FDI-friendly environment certainly provided a strong foundation for growth and has since ignited the high growth experienced in Ireland lately (Sherman, 2008)
These close up meant there were certain factors contributing to the economic relationship between the two countries
Wages Ireland has the lowest labor costs than its peer group countries. Rating over 14, this means the competitiveness between Canada and Ireland is very low- a person will be more than willing to work in Canada than in Ireland so I would recommend that Canada is a good place to move business and work in. But this will mean the provision for wages accommodation and other benefits will need to be increased since the living conditions in Canada are relatively higher than in Ireland. More so the percentage level of the unemployed people is very low in Canada (8.7) as compared to Ireland meaning there is no ready and cheap labor like Ireland.
Financial system Although Ireland is boasting as on of the fastest growing economies in the world, the financial system in Canada is more promising and more stable. In Canada inflation is not commonly felt. There is a guarantee of working for two years without feeling the effect of inflation. Considering the almost wound up economic recession in Canada it is advisable to invest in Canada than in Ireland. The relationship between Canada and other trading nations is very good so a good network in terms of outside market is guaranteed.
GDP per capita, Interest rates and inflation rates. According to different sources the per capita between the two countries differ with Ireland topping both of them i.e. IMF rates Ireland 8th and Canada 13th in the world. The World Bank rates Ireland 5th and Canada 12th while CIA rates Ireland 9th and Canada 17th. Considering both cases Ireland seems to be performing well but lets consider that over 90 of Irish exports are generated by foreign investors. This means that Canada is more of self reliant than Ireland and is not congested by foreign investors. The lending and borrowing interest rates are also very competitive in Canada than Ireland. Inflation is also very low in Canada.
Canada is also one of the few countries which has ever hit a surplus of  10B having recorded a surplus of 14. This was very good news indicating that tax rates and borrowing rates are expected to lower further. Canada was among the first countries to walk out of recession. Its economy is already growing at a rate of 1.3 in the ongoing current quarter.
Conclusion it is really advisable to invest a production business in Canada considering good financial performance, its stability in economy and politics.

    There is no need to emphasize the world is in the midst of the worst financial crisis in recorded history. Majority of the global economies are still locked in the grip of the tightening credit crunch, many will say will last for several years. In the United States, the administration of current President Barack Obama is still wrestling with the effects of the recession that is still buffeting the country and trying to find ways on how to best deal with those affected by it and coming up with strategies to coax America out of the financial doldrums. What caused the crisis in the first place and was the collapse of the American economy a sudden event or did certain events lead to the collapse
    According to the National Bureau of Economic Research, the American economy slipped into the recession in December of 2007 (Chris Isidore). But the announcement did not come as a surprise to many Americans , as they had believed that the American economy was on its way down the road to a recession. According to the Bureau, one of the key factors that led to the recession in the American economy was the downturn of the labor market for 2008. Businesses cut their payrolls by more than a million jobs for the first 10 months of 2008. it was also expected that the American labor force will lose another 325,000 come November (Isidore).
    But the Economic Research Bureau did not categorically state what specific factors contributed to the American recession (Isidore). But the downturn in the housing market was one of the widely held reasons that the American economy nose dived into a recessionary mode. The breakdown of the housing markets boom cycle was begun with the decrease in the prices of the prices for new housing units by the third quarter in 2006 (Benjamin Powell 1). in the Case-Shiller Index,  the average for prices nationwide dipped by more than 30 from their high levels in 2006 through 2009. In other markets, the dive was more severe (Powell 1).
    Phoenix and Las Vegas took hits in the prices of the houses in their locales, decreasing to more than half of their value. Housing markets in California and Florida have experienced decreases in their markets by more than 40 percent. The decrease in the price of residences led to sudden upturn in the foreclosures of the houses owners. The financial indicator Dow Jones slid to less than 7,000 points in 2009 from their 14,000 level in late 2006. (Powell 1).
    The dive in the prices of houses from their highest levels took a significant share in the home building and home sales sectors. As earlier stated, the decrease in the prices of homes caused the increase in the foreclosures in the mortgage market, which led to the losses for banking institutions and the tightening of credit in the market (Isidore).  The housing bubble in the United States was created by the lax monetary program in the United States. This expansive monetary policy led to the birth of the American housing bubble (Powell 1).
    After the collapse of the  dot.com  bubble in the 90s and the  911 terrorist attacks, the Federal Reserve decreased the rate of funds to 2 percent from 6 percent and further lowered the number to just one percent in 2004. When the Fed raised the rate to 5 percent, the bubble in the housing market imploded (Powell 1). The link between the implosion of the housing market in the United States is seen as the main catalyst in the collapse of the American economy and the huge amount of debts used to fuel the growth of the bubble (Thomas Palley 2). But the question that can be posed in the scenario is if the economy required the presence of a bubble to continue the growth pattern of the economy
    If the context for the scenario is the need for the bubble, then the cause of the crisis is the macroeconomic framework that underpins the American economy. The state of the macroeconomic framework in operation at the time of the crisis will well lead to a discovery of the cause, as these principles have been in operation for the past quarter of a century. The first factor is the growth model being used by the United States and the pattern of income allocation and the creation of demand in the parameters of the American economy, the second addresses the American frame of foreign trade arrangements and the construction of the global trade relations of the United States in the confines of the global economic scheme (Palley 2).
    The forces in the macroeconomic level have contributed, albeit slowly, to the creation of the unstable economic environment. The instability can be seen in the bubbles in the economy, the increasing American load of debt, increasing trade deficits and  boom and bust  business cycles. But economic managers and researchers have willfully ignored the signs that have carried the American economy to the brink of ruin. These signs and actions have largely contributed to the collapse of the American economy (Palley 3).
    The crash of the sub prime housing market in 2007 is considered as the main trigger of the collapse, which was exacerbated by the flawed decision to allow the demise of Lehman Brothers (Palley 3). The contagion of the American sub prime crisis spread across the Atlantic. This provoked the insertion of significant amounts of liquidity into the market by the European Central Bank and the Federal Reserve. It is seen that since the primary trigger of the problem, the collapse of the American housing market, will not be resolved in the near future, the problem of the American recession is seen to last for some time (Koichi Haji 1).
    Many observers state that the best case in the current crisis is that the recession and its effects will bottom out by the second quarter of 2009. But even in that best case scenario, the current recession will be chronicled as the longest in the history of the United States since the Great Depression in the 1930s. In the opinion of Argus Research director of economic research Rich Yamarone, the good news in the entire affair is that the government has begun to initiate policies designed to address the current crisis. Just recently, representatives on Capitol Hill passed a tax rebate measure in the amount of  170 billion, designed to resuscitate the ailing economy (Isidore).   
    But the problem is not the amount but in the treatment of the problem. To the legislators, the problem seems to be solved by increasing the demand in the economy. Rather, it is the mismatching of the consumers preferences and the supply that the economy can deliver. Recovery will come when the preferences of the consumers and the supply capacity of the market is made to equate with one another. In the case of the housing bubble, money must be allocated to industries that can provide better satisfaction to the consumers rather than pump more money into industries that led to the collapse, hoping that these will placate the effects of the crisis on the industry (Powell 3).
    The response of the American leadership seems to mimic the experience of Japan  in its own housing market collapse. The government had initiated massive bailout programs and cut interest rates and a massive stimulus program was created. In like fashion, the American government gave out huge amounts of financial resources to companies with questionable credit ratings, such as Bear Stearns, J.P. Morgan and Fannie Mae and Freddie Mac. The process of letting the market determine the status of the institutions delayed the restructuring of the banks and the allowing of the market forces to take its course as to the final state of the financial institutions (Powell 4). 
    The Federal government, in particular the United States Treasury, Congress and the Federal Reserve have all acknowledged the severity of the crisis, and have begun the process of inserting trillions of dollars with the purpose of abetting the effects of the economy. This includes the  700 billion bail out program for Wall Street companies and other financial institutions and billions more to large American companies and borrowers. But in the opinion of Economic Research Institute managing director Lakshman Achuthan, the final cure for the recession is just letting the event run it course until it exhausts itself (Isidore).

Britain is credited with having been the first nation to industrialize in the world. History reckons England as the cradle of industrialization for having developed the first major industrial bases, notably mass production of various goods especially in the textile industry. In the 18th century, Britain experienced a rapid industrialization to become a leading exporter of manufactured goods. The textile industry became an important base for development of other industries and the development of urban settlements.  Britain developed a factory system which replaced the cottage system especially in the textile industry. Industrialization also led to development of urban areas and there were political and social changes that marked industrial revolution. Britain developed laissez faire political system of non-interference with industrial development and the government saw a number of aristocrats and capitalists fuel industrial growth. The wave of industrial revolution spread from Britain to other countries. However, the current trends in industrial development in Britain ascertain a growing trend towards shift from production of goods which has been the base for Britain economic growth, to the service sector.  The service sector has become an important feature of Britain economy although the country remains one of the largest manufacturers in the world.  However, this cannot be termed as deindustrialization but rather it is shift in alignment with the global demand. All over the world, there has been development of various economic sectors and service sector is arguably the largest economic sector coming after the manufacturing sector.  The shift in global manufacturing sector with emergence of low priced production economies like China may help to explain the shift in Britain as a means of adapting to the changing global industrial environment. Also, the trend in technology including increased mechanization of industries has left most people out of work which implies that the mere number of people working in the industrial sector cannot be used to predict the de-industrialization trend. Therefore, the shift to service sector in Britain can be explained in terms of the need to align with changing global industrial environment rather than de-industrialization.
Early industrialization in Britain
Our understanding of the current shift in industrial trend in Britain cannot be complete without understanding the earlier industrial growth in Britain. Britain is considered as the mother of industrialization owing the early industrial revolution that took place in the 17th and 18th century. Between 1700 and 1800, there were major changes to took place in Great Britain that later came to be regarded as industrial revolution (Matthews et al., 2002 81). 
It all began in 1733 when John Kay invented the flying shuttle that revolutionized the textile industry.  This invention made weaving easier and faster on looms and helped cottage industries to process fabrics at a higher rater leading to a shortage in yarns.  In 1764, James Hargreaves also invented the spinning jenny which made it possible to turn many spindles at once.  There were further improvements with the invention of water frame by Richard Arkwrights in 1769. In 1779, Samuel Crompton perfected the spinning art through invention of spinning mule which had features of spinning jenny and spinning frame. It is these inventions and other that eventually led to a growth of a powerful textile industry in Britain and provided the base for developed of other industries.
The growth of textile industry led to the emergence of factory system which soon replaced the cottage system that had been used for decades.  Early industries in Britain were only based on cottages and had limited capacity both in technology, access to raw materials, and market (Matthews et al., 2002 161).  The revolution in textile industry enabled production in mass and hence the development of factory system. Apart from changes experienced in textile industry, there were also rapid changes in other industries. For example, metalworking, which had been previously practiced as a cottage industry soon changed to factory industry. The revolution was so fast that in few years, there were many factories which sprang up in various places.
Industrial revolution in the textile industry led to urbanization. The development of factory system made it possible to employ large number of people. People moved from rural areas and settled around factories where they worked. Although this was marked by poor housing and other social problems, it provided the bases for growth of modern cities.  Men, women, and children all worked in these factories, albeit under inhumane conditions.
The development of the textile industry catalyzed the growth of other industries. It led to development of steam engine. Steam engine was used in steam pumps which were mounted on iron smelting works too pump air into furnace to smelt iron. This helped in growth of iron smelting industry and also the growth of transport sector.  The steam engine was soon used to develop trains used in transportation of raw materials, people, and finished goods.  Steam engine was also used in mining coal in deep mines and helped in lifting coal the ground surface from underground mines.  The transport sector also rapidly development with the invention of Johan McAdam roads as required by the General Turnpike Act passed in 1773 by the parliament.
Industrial revolution in Britain brought about social, political, and economic changes. There was great advancement economically as people found livelihoods working in industries. There were political changes as government became involved in setting out working conditions especially with enactment of Factor Acts in 1802 and 1819. These acts were made to regulate working conditions especially in reducing child employment.  Rise of trade unionism can also be traced to the early industrial revolution. Unionization was considered paramount in fighting poor working condition and fighting for rights of industrial workers.
From Britain, industrial revolution spread to the rest of the world. First it spread to nearby countries like France, Germany, and others before spreading through migration to United States and other Britain colony. It can be argued that British colonialism was basically aimed at providing more raw materials to fuel the growing industry. Most Britons were employed in industries at home or abroad. Industrialization catapulted Britain to become the  most industrialized nation in the 18th and 19th century but today it is ranked 6th in terms of industrial production.
Shift to service sector
The momentum that marked early industrial revolution in Britain seems to have slowed down.  Rapid development of industries has slowed down and there is an eminent shift in industrial production in the country.  Although the country houses all sorts of industries from textile to aeronautical industries, it is evident the glamour and glare that marked early industrial revolution in the country is diminishing, not because the level of industrial production has gone down but the number of people working in the sector has substantially reduced and overall contribution of the sector to the country GDP has also reduced.
During the era of industrial revolution and in the first half of the twentieth century, the manufacturing sector was important to Britain GDP. However, its contribution to GDP has reduced over the years and the service sector is today the largest component of the GDP.  According to CIA fact book (2009) the service sector contributed 74.5 of the GDP in 2008 while the industrial sector contributed 24.2 and agricultural sector contributed 1.3.  This indicates that the service sector is the most important sector the economy.  After the Second World War, the manufacturing sector accounted for more than 40 of the GDP but this has substantially reduced over the years owing to declining output (BBC, 2002). The rise in the service sector has been attributed to the growing trend in the world economy where the service sector is emerging as the most profitable sector.  The development of the service sector therefore aligns Britain economy in line with the world economy. Although it may not have been declared an official measure of the economic growth, the services sector is currently an important indicator of the advancement of a country economy. It will be found that countries with larger service sector have an advanced economy compared to countries with larger manufacturing sector. However, there is a close interlink between service sector and manufacturing sector in the sense that both complements the other.
It is evident that although Britain is ranked number 6th in industrial production there has been a decline in the manufacturing sector in the country. This is generally attributed to two factors. First, there has been shift of industries from higher wage economies to low wage economies. Second, there has been unprecedented growth of the service industry and stakeholders who previously operated manufacturing firms could have shifted to service sectors. This explains that this change could be aligning with overall change in the global economy.  The following graph shows the decline in Britain industrial production since 1990

Adapted from BBC (2002)
The above graph clearly illustrates that the manufacturing sector in Britain has been on the decline.  The graph shows a dip in the manufacturing sector in 1991-1992 and then a sudden peak in manufacturing in 1994-1995.  This graph shows an unsteady growth in the manufacturing sector in Britain since 1990.  The worst trend is however recorded from 2000 where the graph shows a step dip in industrial production going below the 1992 levels.  Therefore it is evident that the manufacturing sector output has declined at an alarming rate since the turn of the century and if anything it paints a grim picture of the future of the sector.
Analysts argue that this has been attributed to years of underinvestment (Moore and Briscoe, 1999 39). This is generally contributed by many factors including internal and external factors. Unlike other countries, Britain has not been in a position to attract internal and foreign direct investors which puts a question on the prevailing government policy.  However, analysts points out the emergence of low waged economy in Asia especially China which has attracted a large number of foreign investors. While Britain continue with high wage policies which are meant to align with standard of living in her cities, countries like China have taken advantage and propagated low waged economies, tax breaks, and generally low cost production economies attracting thousands of investors.  As can be seen in the graph below, there has been decline in investment in the manufacturing sector in the country since 1990s.  This has dealt a blow to the continued reinvention of the manufacturing sector.

Adapted from BBC (2002)
The decline in the manufacturing output in UK has also led to a decline in employment in the sector. At the turn of the nineteenth and twentieth century, the manufacturing sector was the largest employer in Britain but it has been overtaken by the service sector. About a hundred years ago, more than seven million workers were employed in the manufacturing sector but today, this number has drastically reduced to about three million. Of the 31.2 million people in the Britain labor force, only 18.2 work in the manufacturing sector while more than 80.4 work in the service sector with about 1.4 working in the agricultural sector (CIA Fact book, 2009).  However, research shows that about 2.4 million jobs in the service sectors are supported by the manufacturing sector which ascertains the relationship between the two industrial sectors. As can be seen in the graph below, the rate of employment in the manufacturing sector has been on the decline over the years since 1970s

Adapted from BBC (2002)
 The above graph shows that the total employment in the manufacturing sector has systematically reduced over the years to its low in the turn of the twentieth century. This has been attributed to the declining level of investment in the sector which means there are few new jobs which are being created in the sector.
In apparent shift in the global economy, there has been evident change in the industrial establishment in the country. Emergence of new industries has showed a patterned change in production and employment. For example the aerospace industry which is relatively new in the economy having been established after the First World War it today one of the largest employer in the manufacturing industry with more than 100,000 employees.  Although mechanization has reduced employment, faltering rate of employment can be attributed to declining investment which means that there are fewer new jobs that are being created in the sector (Matthews et al., 2002 198). There are some industries which have declined over the years and have been replaced by more profitable industries. For example the industries which fueled industrial revolution including steel, coal mining, textiles, and others have reduced over the years and have been replaced by efficient and less labor intensive industries like pharmaceuticals, electronics, and others. This partially explains the reduction in the number of employees in this sector.  However,   relocation of industries to low wage economies can also be pointed out as a major factor leading to reduction in employment in the sector (Rowthorn and Ramaswarnyl, 1997 12). Most industries have relocated to Asia, South America, and few to Africa where cost of production is relatively low compared to Britain.
However can this phenomenon be explained
It is difficult ascertain whether Britain is experiencing de-industrialization or aligning to global market demand.  In its definition, deindustrialization is described as social and economic change which signifies removal of industrial capacity in a country, especially considering the heavy industries, and marked by a shift to service sector (Kucera and Milberg, 2003 192). Although there are many definitions that befit deindustrialization, the shift from industrial capacity to service capacity as a percentage of total GDP output put across a sound meaning.  Considering this definition, Britain can be considered to be experiencing a decline in industrial output and at the same time it is aligning its economy to the global market trend.
As was highlighted earlier, the global market is experiencing unprecedented change and most countries are now gearing towards development of service based economy. All over the world, the service sector is contributing a larger part of world GDP and therefore this phenomenon is not peculiar to Britain alone.  Apparently, Britain has been moving in line with the development in the world market where the demand is leaning more on the service sector compared to manufacturing sector. The government has also moved in line with demand in the world market to implement policies that are geared towards supporting the service sector.  Therefore the government efforts in developing policy framework that supports the service industry is in line with the global economic trend and does not in any way signify  lack of support for the manufacturing sector.  Although Britain is experiencing deindustrialization, this has been necessitated by the trend in the global business environment where the demand is leaning towards the service industry.
Conclusion
Britain was the first country to experience industrial revolution in the world.  This was necessitated by a number of inventions especially in the textile industry which formed the base for industrial revolution. Form Britain, industrial revolution spread to other countries and later all over the world.  For many years, the manufacturing sector has been an important sector of the Britain economy but this has substantially changed since the second half of the twentieth century. Years of low key investment in the manufacturing sector has reduced the overall manufacturing output and employment. Reduction of the manufacturing sector has been attributed to different factors including emergence of low wage economies in China and the rise of the service sector.  Although Britain is experiencing deindustrialization, the shift towards the service sector has been attributed to change in global business environment.