http://www.chinadaily.com.cn/bizchina/2009-01/14/content_7394763.htm
Summary:
The Civil Aviation Administration of China (CAAC) is setting a floor price for the air tickets. The airlines that offer tickets at less than the minimum price that CAAC has set could have routes cancelled by CAAC as their names of airlines are on the list that CAAC publishes every 15 days. CAAC is setting the price floor to prevent a price war among the airlines since the domestic airlines have offered the discounts of 70-80 percent off to attract customers so their planes will not be cancelled by CAAC due to the emptiness of planes and that lead them to lost more than seven billion Yuan (approximately one billion in Canadian dollars). Also CAAC wants to prevent airlines counter-attacking airlines that are offering big discounts on flights since some airlines have asked ticket agents to stop selling tickets from certain airlines.
Connection:
According to chapter 3, price floor could be legislated if the equilibrium price is too low and making it illegal to sell the product at a price below the legal minimum. In this case, CAAC decided to set a price floor for airlines and set the punishment for airlines that sell tickets lower than the minimum price. For the airlines that aren’t selling at the equilibrium price or higher, their “illegal” routes could be cancelled and for the surplus, the routes that aren’t having a certain amount of customers will be cancelled too. The CAAC has basically balanced the disequilibrium situation.
Reflection:
My uncle loves to travel and he used to travel places when the economy is in recession so then he would have less expenditure. Over the last few months, he has travelled through at least fifteen places in China since the internal airlines of China were fighting against each other by their prices and customer services. The 70-80 percent lower prices attracted my uncle, yet the CAAC set the price floor for the airlines distract my uncle attention of places to travel from China to England and Paris. My uncle has commented on the price floor that CAAC has set, he agrees that CAAC is making the right decision as to prevent to keep losing money, but as a traveller, he thinks that travelling in China is not a good deal anymore whereas travelling in England and Paris are great deals since the exchange rate of Hong Kong dollars to pounds have been lowered due to the value of pound has dropped.
Monday, November 24, 2008
Wednesday, November 19, 2008
Chapter 2
http://news.bbc.co.uk/2/hi/business/7737507.stm
Summary:
"Sellers are beginning to face up to the reality that their houses are not worth as much now as they were 12 months ago," said Chris Brown, president of the NAEA. As the Global banking crisis slowly appears on the British and Americans' economy, everyone is now noticing that a recession is coming up soon or already started which means the stock market is crushing and the prices of houses are dropping either. That leads the owners of the houses start selling their houses to prevent losing money since their houses' values are now dropping and the values of houses might drop lower than the prices that they bought in. "Buyers are now holding all the cards and sellers need to realize that if they want to sell in this market then they may have to accept an offer they wouldn't have even considered six months ago," said Daniel Lee of Globrix. Eventually, buyers are now deciding to sit back and just keep eyes on the houses and the stock market.
Connection:
According to the text book, there are a few factors that affect the buyers' demand of buying houses. The three factors that affect the most are the expectation of future prices, number and characteristics of buyers and expectation of future incomes. Firstly, most of the buyers have noticed that the prices of houses have dropped a lot and it will probably drop continuously in the next few months as the stock market is crushing and it usually follows what the stock market does, so then buyers have better advantages on the price. Secondly, as the stock market is crushing, more buyers are coming out and selling their houses. As the stock market crushing, more sellers will come out and as the situation getting worst, sellers will think that they should get rid of their houses as soon as possible which means that they will lower the prices of their houses when selling. Lastly, the expectation of future incomes which affects the most that scares off buyers because people are scare that they might loss their jobs or their incomes might be less due to the Global banking crisis.
Reflection:
If the prices of the houses drop a bit before the Global banking crisis appears, I believe that many people would have bought it and won’t become the situation like now. As the prices of the houses drop, I think the owners of the houses are the ones that worried and upset, but for the other ones like buyers would be appreciated. For my dad and mom, they are appreciated this situation, but they aren’t planning to buy houses at this time since they think that the prices will get even lower in the future. They are planning to buy apartments in British as investments when the prices of houses drop till to the same level as the values of houses during SARS. On the other hand, I believe these situation of the stock market and the dropping of the values of houses have frightened a lot of business people since these situations are implying that reccession is coming up soon.
Summary:
"Sellers are beginning to face up to the reality that their houses are not worth as much now as they were 12 months ago," said Chris Brown, president of the NAEA. As the Global banking crisis slowly appears on the British and Americans' economy, everyone is now noticing that a recession is coming up soon or already started which means the stock market is crushing and the prices of houses are dropping either. That leads the owners of the houses start selling their houses to prevent losing money since their houses' values are now dropping and the values of houses might drop lower than the prices that they bought in. "Buyers are now holding all the cards and sellers need to realize that if they want to sell in this market then they may have to accept an offer they wouldn't have even considered six months ago," said Daniel Lee of Globrix. Eventually, buyers are now deciding to sit back and just keep eyes on the houses and the stock market.
Connection:
According to the text book, there are a few factors that affect the buyers' demand of buying houses. The three factors that affect the most are the expectation of future prices, number and characteristics of buyers and expectation of future incomes. Firstly, most of the buyers have noticed that the prices of houses have dropped a lot and it will probably drop continuously in the next few months as the stock market is crushing and it usually follows what the stock market does, so then buyers have better advantages on the price. Secondly, as the stock market is crushing, more buyers are coming out and selling their houses. As the stock market crushing, more sellers will come out and as the situation getting worst, sellers will think that they should get rid of their houses as soon as possible which means that they will lower the prices of their houses when selling. Lastly, the expectation of future incomes which affects the most that scares off buyers because people are scare that they might loss their jobs or their incomes might be less due to the Global banking crisis.
Reflection:
If the prices of the houses drop a bit before the Global banking crisis appears, I believe that many people would have bought it and won’t become the situation like now. As the prices of the houses drop, I think the owners of the houses are the ones that worried and upset, but for the other ones like buyers would be appreciated. For my dad and mom, they are appreciated this situation, but they aren’t planning to buy houses at this time since they think that the prices will get even lower in the future. They are planning to buy apartments in British as investments when the prices of houses drop till to the same level as the values of houses during SARS. On the other hand, I believe these situation of the stock market and the dropping of the values of houses have frightened a lot of business people since these situations are implying that reccession is coming up soon.
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