April 10th, 2005


Eco 200: Right to housing?

(group) The Bill of Rights, the first ten amendments to the U.S. Constitution of the United States, says nothing about a right to housing. Some have nonetheless argued that housing is a more fundamental right and important right than the rights now protected by the first amendment (freedom of religion, speech, of the press, and of political assembly). Would you be in favor of adding a right to housing to the Bill of Rights? Defend your answer?

The U.S. is a signatory to the U.N. Declaration of Rights, which does guarantee a standard of living enough for adequate housing. Disregarding that for the sake of this question though, I can see both sides of this and I'm not sure which I fall under.

First, adding such a right would not necessarily require that everyone get a house. Were it construed as such, no one need economize for housing. However, if all it did was guarantee a bed in a large dormitory with no storage, there would still be plenty of incentive for people to improve their housing.

On the other hand, it would be fundamentally different than existing rights. None of the current rights give property rights to anyone. By that I mean that all the existing rights enable people to keep property they have acquired (e.g., eminent domain clause preventing government theft of property, or copyright clause allowing someone the economic benefits of their writing). But they do not hand people any good or service (of which housing qualifies). Any time a good or service is handed over without an exchange, it distorts the market and removes the need of people to economize at least to some degree.

I think I'm missing something so far though, as the chapter is all about demand. Yet nothing I can think of so far regarding demand makes this a clear choice. (So I guess the typo in the book leaving the question mark on "Defend you answer?" is appropriate, because my answer to that right now is: no.)


Eco 200: electricity is the energy of choice

(individual) Electricity, by its nature … will not yield much to conservation, whether inspired by government mandates, price, or ideology. It is the energy form of choice. Do you agree with that assertion? Is electricity the energy form of choice without regard to price? Why do some urban transit systems use diesel buses while others operate electric buses? Why do some people heat their homes with oil or natural gas while others use electric heat?

No. And no, electricity is not the energy form of choice without regard to price. While there may be ideological reasons for using electricity, not everyone holds them. Even then if the price for electricity were to rise incredibly high, the amount demanded would move in the opposite direction as people kept their abodes cooler. Some transit systems use diesel, and some people heat with natural gas or oil because those are cheaper, cause less pollution, have less maintenance costs, or other things. The statement seems patently false.


Eco 200: Demand (curve) vs. amount demanded

(individual) Coffee Prices Sink as Demand Wanes. Does that newspaper headline use the word demand correctly? Would you expect those falling prices to be associated with more or less coffee consumption?

The headline does. If it were using it incorrectly (i.e., they meant amount demanded), the prices would be rising. A lower price indicates an increase in the amount demanded. In this case, the demand curve for coffee is changing, meaning that some sort of societal change is causing people to drink less coffee (e.g., switching to low-carb coffee) even though the price of coffee dropped.

I'm not 100% certain on this yet. I understand the two terms. But some sort of dyslexia seems to take hold though when I have to apply them and I get them confused. My application just won't look right to me.


Eco 200: 4.3 cent gas tax

(group) Evaluate the following argument against a call for Congress to repeal the 1993 increase in the national gasoline tax:

Repealing the 4.3 cents-per-gallon tax will give oil companies an additional incentive to raise prices. If skyrocketing gas prices are due to supply and demand factors, as oil companies argue, a reduction of 4.3 cents will increase demand on a product already in short supply. The increased demand will contribute to increased pump prices.

What mistake has the author of the argument made?

Absent other changes, the initial 4.3 cent drop in prices will contribute to an increased amount demanded. But if the prices are then raised again (say, perhaps by 4.3 cents), the amount demanded will drop again. Amount demanded should fall back approximately to the levels that were being consumed the previous time the price was at that level.