What cartels do

http://www.bloomberg.com/news/articles/2016-09-28/opec-said-to-agree-on-first-oil-output-cut-in-eight-years

The next question is, "Will the countries abide by the agreement or produce more than they promised?"

How do people reduce the quantity demanded for products that they need to live?

http://money.cnn.com/2016/09/24/technology/diy-epipen-affordable-alternatives/index.html

Supply and demand in action in the beef industry

Why Grass-Fed Beef Is on a Roll
by: Ellen Byron and Sarah Nassauer
Sep 21, 2016
Click here to view the full article on WSJ.com

TOPICS: Adverse selection, Supply and Demand

SUMMARY: Once a niche luxury, grass-fed beef is showing up in ballpark burgers and on Wal-Mart shelves. People splurge on the leaner meat despite questions about its labeling and flavor.

CLASSROOM APPLICATION: Students can examine the reasons for the increased demand for grass-fed beef. They can also discuss whether adverse selection is an issue in the industry, which leads for the call from some grass-fed beef producers for strict labeling standards.

QUESTIONS: 
1. (Introductory) Why are people willing to pay more for grass-fed beef than for conventional beef?

2. (Introductory) What is the effect of the increased demand for grass-fed beef on the equilibrium price and quantity of grass-fed beef?

3. (Advanced) Define adverse selection. Would the grass-fed beef market be subject to adverse selection?

4. (Advanced) Why do grass-fed beef producers with strict standards call for strict grass-fed beef certification?

Reviewed By: James Dearden, Lehigh University

Morals and free trade

Main Street. Milton Friedman's Morals
by: William McGurn
Sep 20, 2016
Click here to view the full article on WSJ.com

TOPICS: International Trade

SUMMARY: As Trump and Clinton bang the drums for tariffs and renegotiated deals, where's the popular voice for trade?

CLASSROOM APPLICATION: Students can discuss the ethics of free trade and barriers to trade. In doing so, they can develop ethical criteria (e.g., Pareto efficiency, various equity concepts, and maximizing a country's economic welfare) that could be used to evaluate whether a country should promote free trade.

QUESTIONS: 
1. (Advanced) Milton Friedman would ask by what right should an American be prevented from buying a lawful good or service if he found a better price from someone overseas? Where's the morality of keeping a worker from selling the product of his labor to someone who happens to live in another country?

2. (Advanced) Is it ethical for a developed country to place tariffs on products imported from low-wage developing countries? What ethical criteria could be used to answer this question?

3. (Introductory) What are the benefits of trade? What are the negatives?

Reviewed By: James Dearden, Lehigh University

Supply and demand in action in the heavy equipment industry

Heavy-Equipment Glut Weighs on Machine Makers
by: Bob Tita
Sep 19, 2016
Click here to view the full article on WSJ.com

TOPICS: Supply and Demand

SUMMARY: Used machinery is flooding the secondhand market, piling more pain on equipment makers battling slack demand amid a global commodities slump.

CLASSROOM APPLICATION: Students can evaluate the decision by construction firms whether to purchase, rent, or lease machines. They can also evaluate the effect of an increased supply of used machines on the demand for, and equilibrium price of, new machines.

QUESTIONS: 
1. (Advanced) What is the effect of an increased supply of used machines on the demand for, and equilibrium price of, new machines?

2. (Advanced) What is the effect of a strong dollar on the amount of machinery sold abroad by U.S. manufacturers?

3. (Advanced) What is the effect of growth of the rental business on the supply of late-model machinery?

4. (Introductory) Why do manufacturers prefer to sell machinery than to lease it?

Reviewed By: James Dearden, Lehigh University

Supply and demand in action in the migrant-trafficking industry

Bulgaria and Smugglers Escalate Their Migrant-Trafficking Battle
by: Drew Hinshaw
Sep 17, 2016
Click here to view the full article on WSJ.com

TOPICS: Supply and Demand

SUMMARY: In Bulgaria beefed-up border controls aimed at reducing the illegal smuggling of people into Europe have brought new risks, scaring part-time amateurs out of a business they once dominated and turning trafficking over to a monopoly of professional smugglers.

CLASSROOM APPLICATION: Students can evaluate the effect of police crackdown of human smuggling on the supply of smuggling services. They can also evaluate the types of smugglers who exit the industry and the types who remain as a result of the crackdown.

QUESTIONS: 
1. (Advanced) What is the effect of Bulgaria's stepped up efforts aimed at reducing illegal migration on the supply of those willing to traffic people? What is the effect on the price of smuggling?

2. (Advanced) What is the effect of the crackdown on the types of smugglers who exit the industry and the types who remain?

3. (Introductory) Why does the shift to using pricier cars to traffic humans make police work more dangerous?

Reviewed By: James Dearden, Lehigh University

What happens when supply decreases?

http://www.cnbc.com/2016/09/19/gasoline-prices-spike-after-alabama-pipeline-leak.html

Also:

Pipeline Break Lights a Fire Under Gasoline Prices Across Southeast
by: Nicole Friedman and Alison Sider
Sep 20, 2016
Click here to view the full article on WSJ.com

TOPICS: Environmental Issues, Supply and Demand

SUMMARY: Gasoline prices have surged across the Southeast, as the partial closure of a major pipeline has left some gas stations scrambling for fuel and many drivers stuck in lines to fill their tanks.

CLASSROOM APPLICATION: Students can evaluate the effect of a supply disruption in the gasoline market on gasoline prices. They can also consider the effect of the nimby status of energy infrastructure on possible disruptions and environmental disasters of an aging infrastructure.

QUESTIONS: 
1. (Advanced) How does the expectation that gas stations will run out of fuel in the near future on the possibility that the stations will run out of fuel immediately?

2. (Introductory) What is the effect of the partial closure of the Colonial pipeline on gasoline prices in the affected areas?

3. (Advanced) What is a "nimby"? Are energy infrastructure facilities nimbies? What problems will the nimby classification create for U.S. energy supply?

Reviewed By: James Dearden, Lehigh University

Shortages lead to price hikes! Who knew?

http://money.cnn.com/2016/09/16/investing/gasoline-prices-shortage-pipeline-leak/index.html

Yea for a tax on carbon

This opinion in the Washington Post says that the time has arrived for a tax on carbon. Here is the money quote:

"But it would be better to encourage people to buy cleaner cars and cut out unnecessary trips all at once — in fact, it would be better to establish a policy that encouraged individuals and businesses to account for the environmental impacts of driving, turning on the light switch, buying clothes or doing anything else that involves fossil fuels. This policy is a steadily rising carbon tax. A carbon tax would put a lower ceiling on national gasoline use without more aggressive regulatory interventions. It would also encourage every other piece of the economy to green up over time, starting with those for whom doing so is cheapest. This is why it is also the least expensive path to lowering the country’s carbon dioxide emissions."

Supply and demand in action in the Prius market

Toyota's Prius Pays Price for Cheap Gasoline
by: Sean McLain
Sep 07, 2016
Click here to view the full article on WSJ.com
Click here to view the video on WSJ.com 

TOPICS: Supply and Demand

SUMMARY: Toyota's Prius is topping the sales charts in Japan but is struggling in the U.S. as relatively cheap gasoline prices dent the car maker's efforts to present itself as the leader of an environmentally-friendly future.

CLASSROOM APPLICATION: Students can examine factors that affect the demand for the Toyota Prius. In doing so, they can evaluate the effect of the success of the Prius on the number and type of competitive products.

QUESTIONS: 
1. (Advanced) Is gasoline an economic substitute of hybrid and electric cars? What is the relationship between the price of the gasoline and the demand for hybrids and electric cars?

2. (Introductory) Why do hybrids sell well in Japan?

3. (Advanced) Interpret the statement "Toyota's Prius is partly a victim of its own success."

Reviewed By: James Dearden, Lehigh University

Supply and demand in action in the food market

This article states:

"The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar. Lower energy costs for transportation and refrigeration also are contributing to sagging food prices, say economists."

1. What is excess supply and why does it lead to lower prices?
2. Does supply and demand analysis predict that less demand would lead to lower prices? What happens to quantity traded?
3. Does supply and demand analysis predict that lower energy costs would lead to lower prices? What happens to quantity traded?

Food Price Deflation Cheers Consumers, Hurts Farmers, Grocers and Restaurants

by: Heather Haddon and Julie Jargon
Aug 30, 2016
Click here to view the full article on WSJ.com

TOPICS: Supply and Demand

SUMMARY: Consumers' glee at the supermarket checkout over lower food prices isn't shared by all: Farmers, grocers and restaurateurs are feeling the pinch of cheap milk, beef and corn prices on their incomes. Related article: U.S. farm incomes will hit their lowest point this year since 2009, the Agriculture Department forecast, deepening pain in the Farm Belt amid declining commodity prices.

CLASSROOM APPLICATION: Using supply and demand, students can evaluate the effect of a decrease in demand and decrease in (marginal) cost of food production on the equilibrium price of food. They can critically evaluate whether a decrease in demand and a decrease in marginal cost have opposite effects on food prices.

QUESTIONS: 
1. (Advanced) Does an increase in supply and a decrease in demand for a product each lead to a decrease in the product's equilibrium price?

2. (Advanced) What is the effect of lower energy costs for transportation and refrigeration on food prices? What is the effect of those lower costs on the profits earned by farmers?

3. (Introductory) Why are farmers exiting the food industry?

Reviewed By: James Dearden, Lehigh University

The lure of protectionism

This opinion discusses reasons that popular opposition to free trade is growing: https://www.bloomberg.com/view/articles/2016-09-01/the-lure-of-protectionism-will-grow.