Chapter 2 was all about the operation of markets. We talk about supply and demand, quanitity exchange, and of course elasticity. We learned how are prices set and why they are the way they are. Lets not forget the infamous supply-demand graphs where we discovered the equilibrium price, does 'buy' and 'sell' and '$29' refresh your memory? It should!

November 7, 2006
Meat products recalled after discovery of syringe. Maple Leaf Foods had to recall their turkey and ham from Ontario grocery stores after a woman discovered a syringe slightly embedded to their product. Security has been increased after the incident, and we are still not informed how the syringe really got there. Ironically enough, their slogan is "The difference quality makes."

I'm guessing after this whole incident, the demand for Maple Leaf products would decrease. If I was a consumer of this product I would be horrified at the thought of a syringe being near the production of my food. Unless they need it for reasons I don't know about and I have not been clarified, but for now I'll just think they're using taste enhancing drugs even though no needle was said to be found in the site. This is a great opportunity for the meat market, since Maple Leaf is a huge competitor, this might just open doors for other brands who haven't had much business. People might consider trying new products and start shopping around. The change in quanitity demanded, I believe, would change drastically since ham and turkey are such common products and can be found elsewhere. Since ham and turkey have easy product substitutes, the demand for salami or bolonga might just go up. Supply of Maple Leaf ham and turkey would eventually go up due to the lost of sale, in which case the smart thing to do would be to lower the price until you regain the trust of your customers. The supply of Maple Leafs would remain the same, but the quanitity supplied might change if small grocery stores don't want to risk holding that certain product. Therefore, the demand-quanitity exchange graph would shift to the left. Ham and turkey are inelastic. Meaning, if the price changes by a small amount, the outcome of quanitity exchange would just be affected slightly. Ham and turkey are usually inexpensive, and they are pretty much in an average person's regular grocery lists. Especially to those who makes their own lunch everyday either for school or work. So having prices fluctuate by 10-20 cents, wouldn't change the mind of the consumer buying it. But having a news article questioning the health security during your production could do extensive damage. I'm pretty sure Maple Leafs could up their advertising and this whole thing would be wiped out of memories in no time. Syringe, what? We'll hear that response in a month or sooner.

News Article:
http://www.cbc.ca/canada/ottawa/story/2006/11/07/meat-cfia.html


I remember watching this story on the news and then picturing the Maple Leafs commercial. How they say they make quality meats the old fashion way and how they're so proud. Hah, what nonsense. But these things tend to happen all the time, it all depends on the aftermath promotions and public relations. If I was a regular buyer of Maple Leafs, I'd probably stop buying it for awhile just to be on the safe side. Eventually, once they reassure nothing like this would happen again, I'd be a sucker and give in.

In chapter 1, the core concept was to grasp the idea on opportunity costs and the law of diminishing returns. They talked about scarcity and how everything is considered scarce, especially natural resources that aren't renewable. We were introduced to graphs which help us determine whether or not prices and products have a positive relationship or a inverse relationship.

November 10, 2006
'Light' and 'mild' labels are to be removed from cigarette packages by 2008. Health officials say that the terms 'light' and 'mild' are deceiving to Canadian smokers who perceive that smoking a 'light' cigarette is better for them, in which case it's not. Tobacco is still as harmful in any type of cigarette, the 'light' label just means a lighter taste. Tobacco companies now have to sign a World Health Organization treaty to agree upon the new terms, so instead of labelling packages with 'light' or 'mild' they must give 'flavors' of some sort.

This article is pretty straight forward, but what does it have to do with Economics you ask? Well lets think about the opportunity cost for the tobacco companies who decided the sign the treaty. In a nutshell, the direct cost would be: having to design a new package and a lot of new promotion to regain customer loyalty. The biggest opportunity cost: the lost of 'light' and 'mild' cigarette smokers which would probably lose the company millions of dollars if these smokers actually believe that 'light' and 'mild' were better for their health in terms of the regular. Tobacco companies are a multi-million dollar industry, and cigarettes are far from scarce. So maybe putting production of any kind of 'light' and 'mild' cigarettes on hold wouldn't even come close to hindering their revenue. The law of diminishing returns states that if you maximize Land, Labour, and Capital your total revenue would actually decrease. So taking a break from making all those other cigarettes, and concentrating on promoting the regular might increase profits for the long run (although, I strongly hope not and wish that the world would smoke-free). You'd think because they have to change their label that the production-possibilities curve would shift to the left due to customers who stop buying the 'light' and 'mild' cigarettes. But no matter how many inhibitors that try to reduce the sale of cigarettes, for example attaching a picture of a smoker's lungs, people just keep on buying cigarettes and nothing seems to be slowing down that rate.

News Article:
http://www.canada.com/montrealgazette/news/story.html?id=a8c00572-5635-48e5-9003-a04ab5996bd8&k=12789


I seriously cannot stand smokers. They pollute our air, harm the people around them, and are basically just digging up their own graves. To be honest, I always thought that 'light' and 'mild' were 'less harmful' cigarettes. Boy, who ever chose those clever words sure had a good long run. Hopefully the removal of these labels would give a reality check to smokers and we'll see the demand for cigarettes to plummet. What's better than more money in your pocket, fresh breath, and cleaner lungs?