Last Updated 17 Jun 2020

Economics and Expensive Energy Provider

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1. Should energy be subsidized by government?

The Philippines is now the most expensive energy provider in Asia. This means that our electricity, natural gas (LPG) and even our oil prices are much expensive than our neighboring countries. So should energy be subsidized by the government? The answer is no. The country has a national deficit which means that we have to borrow money from bank like WBO to help pay what is needed to run our government projects, department and government programs. If we borrow more money, this will increase our national deficit which is not practical.

Energy subsidies leave the little to no effect on net domestic production other than to help prevent further declines. However our government should lead the way to providing or even providing renewable energy like solar and wind. Subsidies and support can encourage producers to bring new technologies to market until manufacturers are able to produce the new technology in large quantities at costs competitive with established commercial technologies.

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2. Perfect competition under Ebay: A fact or factoid Ebay is in fact practicing perfect competition. For these following reasons: * Many buyers/Many Sellers - Ebay has this for some goods that are for sale, but often the items on ebay are either one-of-a-kind, or only sold by one seller, which makes it not competitive. * Low-Entry/Exit Barriers -- Ebay requires sellers to set up accounts and register personal information, but it is still a fairly low entry barrier. There are virtually zero exit barriers.

* Perfect Information - (Prices are assumed to be known to all consumers and producers) Ebay does not have this as the final sale price is not known until the sale is completed. People may see an item listed at $10, decide they are willing to spend $11, only to discover that the product is now listed at $12, through auto-bidding.

* Transactions are Costless - Ebay charges sellers for each sale.

* Firms Aim to Maximize Profits - On Ebay, firms do not always sell where marginal cost equals marginal benefit, and hence do not maximize their profits.

* Homogeneous Products -- (The characteristics of any given market good or service do not vary across suppliers) The Ebay feedback system can show you that not all sellers provide the same quality goods and service.

3. U.S financial crisis: Impact on emerging market.

The financial crisis in the U.S. started when the owners of houses that were bought using credit and loans from banks didn’t or wasn’t able to pay the housing companies and housing developers. They also didn’t or wasn’t able to pay back all the loans they got. The banking and housing companies suddenly collapse because they weren’t able to recover the money owed to them.

This has great effect on emerging markets because the financial institutions collapse they suddenly tighten their credit requirements. This made it hard for people to borrow money and use it as capital for their business catering on emerging markets. Emerging markets have turned in a remarkable growth performance in this decade but it is still being affected by worsening financial crisis of the world. Many projects have been halted because of this crisis. Prices of commodities are increasing affecting how a country grow economically.

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