Today's Economics

Economics (from the Greek пЯкпт [oikos], 'family, household, estate', and нпмпт [nomos], 'custom, law', hence "household management" and "management of the state") is a social science that typically studies the production, distribution, trade and consumption of goods and services(wiki). Since the early part of the 20th century, economics has focused largely on measurable variables, and employed both theoretical models and empirical analysis. Economic logic is increasingly applied to any problem that involves choice under scarcity or determining economic value (such as politics, religion, pyschology, history and dating). A professional working in economics or having an academic degree in the subject is an economist.

The subject is broadly divided into two main branches: microeconomics, which deals with individual agents, such as households and businesses, and macroeconomics, which considers the economy as a whole. An alternate division of the subject distinguishes positive economics, which tries objectively to predict and explain economic phenomena, from normative economics, which recommends one choice over another--such recommendations often involve subjective value judgments.

The mainstream economic paradigm is a combination of neoclassical economics and Keynesian macroeconomics. Crucial assumptions of this paradigm include the idea that resources are scarce while wants are unlimited, which is sometimes characterized as the economic problem, and an understanding that the value of most goods can be represented in terms of their open-market price. Various schools of heterodox economics, for instance socialist economics or green economics, seek to explain economic phenomena using different basic assumptions. (Wiki)

In the industry/organization of automotive, fuel, has been a huge topic for years. Even more so now as we all know gasoline/diesel prices have been driving through the roof as the weeks progress, with high prices anticipated. In previous posting in the classroom I have stressed the subject of alternative fuels, and will be talking about econimic indicators of ethenol an laternative fuel source to crude.

Fuel ethanol production in the United States has grown substantially in recent years, both in volume and in number of participants. In 2004, the U.S. ethanol industry produced 3.4 billion. The industry continues to expand, as incumbent producers are currently expanding existing plants and 18 new entrants are constructing new plants. As a result, an additional 1.3 billion gallons per year of ethanol capacity are expected to be operational within the next year.

A small amount of domestic ethanol production is produced from waste products, such as brewery waste, beverage waste, and cheese whey. Outside the United States, a large amount of ethanol is produced from sugar. Several factors account for the recent increase in ethanol production and demand. First, given current government subsidies, U.S. ethanol production can serve as an economical means of extending gasoline volumes. For example, firms can produce a blend of 90 percent gasoline and 10 percent ethanol by volume ("E-10") for use in automobiles, and sell E-10 at a price comparable to gasoline without ethanol. The price of ethanol itself reflects this fact, as spot ethanol prices appear more closely related to gasoline prices than to the price of corn or other inputs.

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