The penalty point scheme introduced by the Housing Authority of Hong Kong

The penalty point scheme introduced by the Housing Authority of the HKSAR to promote estate cleanliness will get tougher next year with its tenants for many disdeeds.

Those living in public housing estates who allow stagnant water to accumulate or who let their laundry drip will be penalized with five points.
If its tenants caught using a public flat as an illegal food factory, they will be fined seven penalty points.

When a household has accumulated more than 16 penalty points, they'll be evicted.

According to the first law of demand, what would you expect after the introduction of such new penalty scheme? (Students, give your response and get bonus marks!)

How the price elasticity of demand of fuel oil relating to the oil revenues:

The net revenues of net oil export of the Organization of Petroleum Exporting Countries (OPEC) for 2004 are projected to be $286 billion, a 19% increase from 2003 revenues of $240 billion, and a 47% increase from 2002 revenues of $195 billion. (According to Energy Information Administration of U.S. in June 2004)

Rapidly fluctuating oil export revenues over the past few years also have affected non-OPEC countries, such as Russia and Mexico, significantly.

The soaring oil price is made possible as world oil production capacity and U.S. oil inventories hit historic low, and at the same time world oil demand grows strongly.

At the mid-year of 2004,

• 1) unrest and tension in Venezuela;
  
• 2) persistent low oil inventories in the United States;
  
• 3) instability and attacks on oil infrastructure in Iraq (the Iraq war, which led to a cutoff of Iraqi oil exports from March to December 2003;
  
• 4) troubles in Nigeria, which resulted in the loss of some oil production in that country ;
  
• 5) terrorist attacks in Saudi Arabia.

I think even the world oil demand remains stable, the shortage in supply and stock of the oil would certainly cause a sharp rise in oil price that leading to a huge increase in revenues of the oil exporting countries.

Why? It is due to the low price elasticity of demand of fuel oil. Do you think so?

I have the following puzzles

I know that both air travel service(3 hours flight) and trains (36 hours on rails) are operating currently between HKSAR and Beijing.
Suppose that under the following circumstances :

• (a) the general real wage rate of the HKSAR citizens rises;
  

• (b) a fixed departure tax is imposed by the government no matter the HK people travelled by airplanes or trains;
  

How could you predict the impact on the change of number of travellers using airplanes (air passengers) and railways (rail passengers) from HKSAR to Beijing? (Hint: be resolved by the Law of Demand)

Explain the following phenomena :

I have observed the following phenomena:

Case 1: Relatively more high-quality Korean ginseng are exported and sold in oversea markets but more low-quality ginseng are sold in Korean local market.

Case 2: Luxuries (e.g. diamonds, jade and pearls) take up larger percentages in international trade than in domestic trade.

Case 3: Larger proportions of wine of better quality (e.g. red win, brandy and whisky) are consumed after the imposition of a per unit sales tax.

Case 4: The average length of airline journey increases after a rise in the per head airport departure tax is imposed by the Government.

Please try to explain why the above phenomena in Economics can be accounted for by the Law of Demand??

Standard Chartered to lay off her 200 staff in Hong Kong

Despite the record profits in Hong Kong, Standard Chartered bank plans to sack 200 employees (her total employment in our territory is 4000 people, i.e. about 5 percent of its local work force) in HKSAR.

The 200 redundancies are to be made in the division of consumer banking.
It is an unfortunate event, and it is also a tragic news to the those staff concerned.

I wonder why even such a large banking institution like S.C. Bank, with high-profit earning today, using such method of cutting the number of her employees as to reduce the operation cost just because of keen competition in banking!

What do you think?

Financial Secretary Henry Tang proposal on tax increase

According to Financial Secretary Henry Tang submission of his proposal on the increase in govt. budget next year on 1st November 2004 in the Legco, additional items like a goods and services tax, capital gains tax, green taxes and increase of tunnel tolls for the Cross Harbour Tunnel would be included in coming consultations over the 2005-06 budget.
He pointed out these options might help the government broaden its tax base and reduce its operational deficit, estimated to reach HK$46.6 billion this fiscal year and HK$39.9 billion next year.

What is your opinion?