Obesity And Poor Nutrition Nutritional Labelling

Due to the rising levels of obesity and poor nutrition, nutritional labelling was implemented to help consumers make healthier choices when purchasing food. The term ‘policy’ is used when a government or organisation implement a plan of action or decision that accomplishes a certain goal (Richards and Smith, 2002). Policy enables the government and particular organisations to agree that something should be carried out in a certain way. Policies are formulated to raise awareness and in this case food policy aims to help inform consumers about healthy eating and how to lead a healthy lifestyle. Food policy is an evolving subject which is constantly changing and developing to meet the needs of society. Nutrition labelling was created to be consistent across all food products so as to avoid confusion to the consumer (Van den Wijngaart, 2002). In England the policy involving food labelling has been relocated from the Food Standards Agency (FSA) to the Department of Environment, Food and Rural Affairs (Defra). The policy regarding nutrition labelling is now in the hands of the Department of Health (Food Standards Agency, 2014). The Food and Drink Federation discovered that 95% of consumers examined the food products they were purchasing for nutritional information. The Food Labelling Regulations 1996 apply the EU labelling rules in the UK. The needs and necessities of consumers are constantly changing and therefore the policies have to develop and change too (Hunt, 2006).Show MoreRelatedContemporary Marketing Practices Of America s Health Essay1670 Words   |  7 Pagesthe rapidly increased popularity of processed convenience foods laden in fat and sugar, along with the correlating rise of obesity, diabetes, and cardiovascular diseases. As of 2010, nearly 70% of adults in America aged 20 or higher are overweight or obese (Ogden et all). Both obesity and diabetes are preventable diseases that result directly from overindulgence and poor nutrition. Contemporary marketing practices, which entail displaying misleading buzzwords on front-of-package food labels, negativelyRead MoreThe Eating Habits Of Australian Individuals And Families1400 Words   |  6 PagesThe eating habits of Australian individuals and families has changed considerably over the last 20 years. The food choices being made by Australians can be directly linked to their income and nutritional knowledge. Without following the correct recommendations, income and nutritional knowledge has the potential to dramatically impact upon individuals and family’s health and wellbeing. The income of Australian individuals and families is immeasurably affecting their eating habits which is then dramaticallyRead MoreChildhood Obesity : The Prevalence Of Obesity1525 Words   |  7 PagesIn recent years, the world’s prevalence of obesity in children has increased alarmingly in most of the countries. It is estimated that 170 million of children under 18 years old are overweight, in the US there is a 30% prevalence of obesity, similarly 27% of children in Mexico are obese (OCDE, 2014; Gutià ©rrez et al., 2012). In some countries like East Germany, New Zealand, the Netherlands and Canada the prevalence of overweight children had risen by one percentage point each year (Wang LobesteinRead MoreObesity : The Body Mass Index Essay1699 Words   |  7 PagesIntroduction Obesity can be defined as an abnormal increase in the proportion of fat cells, mainly in the viscera and subcutaneous tissues of the body (Mosby, 2010). The official medical measure of obesity is the body mass index (BMI), an index of an individual’s weight relative to height. The World Health Organisation (WHO) defines obesity as having a BMI greater than or equal to 30 (World Health Organisation, 2015). New Zealand (NZ) ranks 3rd highest for obesity rates amongst OECD (OrganisationRead MoreNational Population Health Case Study1058 Words   |  5 Pagesthe community and their potential to reduce the burden (CM). Obesity is a prominent NPHA within Australia (CM). It refers to increased energy dietary intake without an increase in energy expenditure through physical activity, resulting in energy storage as fat and weight gain (CM). Prolonged increased energy intake leads to excess body weight. The main factors influencing obesity are poor diet and inadequate physical activity. Obesity at an individual and population level is commonly measured usingRead MoreP1 Unit 21 - Health and Social Care Level 3 Essay2842 Words   |  12 PagesP1 – Explain concepts of nutritional health Concepts of nutritional health Food Food is any substance that is eaten to nourish the body and can be solid or liquid. Food can be taken into the body by mouth, by tube or even directly into the vein for those who are unable to feed by mouth due to ill health or health issues which does not able them to eat or drink normally. Food makes your body work, grow and repair itself and the kinds of food you eat can affect the efficiency of these processesRead MoreWhat the World Eats, by Peter Menzel1750 Words   |  7 Pagesthat Japan continues to be among the top ten countries with the lowest obesity rates with only 3.1% of people with a BMI over 30. Comparing this to the current obesity rate in the United States at 33.9% tells us that even if there has been an apparent increase of the consumption of junk food in Japan, the country is still not anywhere near partaking in the level of unhealthy eating seen in the U.S. (A spotlight on world obesity rates, 2013). As said by Naomichi Ishige in The Cambridge World HistoryRead M oreUnit 21 Task 26958 Words   |  28 PagesInformation Booklet. ‘Nutrition and the effects on health’. P1,P3,M2,D1. This booklet will contain: What nutrients are and how they affect our body, malnutrition, deficiency etc. The guidelines which determine nutritional health including dietary reference values (DRV), what a balanced diet is and how to maintain this, what BMI is and how to calculate it, the eat well plate, I will explain possible influences on dietary intake, assess how these influences may affect the nutritional health of individualsRead MoreAnalysing Malaysian Students Attitude Towards Fast Food Health Essay2923 Words   |  12 Pageshealth effects, including obesity, hypercholesterolemia, cardiovascular disease and some cancers due to massive portion of fast food, high energy density, palatability ,high content of saturated and trans fat, and low content of fibre. In order to induce students to have a correct understanding of the problems associated with fast food and to form a good dietary habit, it is necessary to realize how they perceive the influence of fast food on their health and nutrition. The purpos e of this studyRead MoreObesity : A Major Factor That Affects The Health Of The Local Population Essay2256 Words   |  10 Pages This paper identifies obesity as a major factor that affects the health of the local population, and the initiatives that are currently in place to manage obesity. Indeed, according to the NHS, almost a quarter of the adult population in the UK are obese (Brisbois et al., 2012). In the course of this discussion, this paper explores obesity in terms of: public health beliefs and behaviours, determinants of health, the inequalities across populations from national and local perspectives, national

The Effects Of Synthetic Cannabinoids On The World Of...

The world of medicine is getting stronger everyday with fighting of common diseases. However, while this may consider medical drugs with healing abilities, there are drugs that are changing every year to adapt to legal issue. This drug is synthetic cannabinoids or commonly known as spice. Synthetic cannabinoids have many different names based on the strength, but will be referred to as spice in this paper. The research has been lacking in what actually happens under the conditions of spice because of the adaption that happens everyday. Three scholars, Max Spaderna, Peter H. Addy, and Deepak Cyril D’Souza, wrote an article in Psychopharmacology journal indicating everything that we know about synthetic cannabinoids to date. These scholars mostly use Logos as an appeal approach to their paper, but these appeals can be turned into a Pathos perspective with exigence weaved into the paper. Overall, this paper is an informative article about what can happen with the use of cannabino ids. This will explain why, people in general, need to know more about this synthetic drug. In this article, the most used appeal in this would be logos. The main cause of this paper is to show the side effects of this drug which would be, â€Å"Acute psychoactive effects include changed in mood, anxiety, perception, thinking, memory, and attention† (Spaderna, Addy, D’Souza 525). In the abstract, they show what they are trying to prove to the audience of pharmacologist, doctors, and nurses. Afterwards, theShow MoreRelatedShould Marijuana Be Legal?1324 Words   |  6 PagesMedical Marijuana indicates the usage of the plant and its desired contents found in the organism known as cannabinoids. There are hundreds of chemical cannabinoids, but the two main ones are called tetrahydrocannabinol (THC) and cannabidiol or CBD. These cannabinoids are used for many serious illnesses and the plant species has been utilized by humans dating back thousands of years in medicine textb ooks and records. Muscle spasticity, AIDS treatment for patients, chemotherapy which induces vomitingRead MoreEssay about Marijuana Legislation: Marijuana Should Be Legalized1119 Words   |  5 Pagescommonly experience headaches from caffeine withdrawal as a result of their body’s addiction to the drug. Marijuana, on the other hand, has zero withdrawal symptoms. Its side effects include sleepiness, a feeling of euphoria, and an increased appetite. So, why are those deadly substances legal when marijuana has no fatal effects to one’s health? Tobacco use kills millions, while marijuana use alone has not been recorded to have killed a single person in history. Evidence has proven that marijuana isRead MoreShould Medical Marijuana Be Legalized?1551 Words   |  7 Pagesforced to use second rate drugs to help them deal with conditions such as nausea, glaucoma, chronic pain, and multiple sclerosis. Why does the â€Å"world’s best health care system† use dru gs that are not as effective as marijuana, but have more side effects? The United States Federal Government is going on a personal crusade to ban legalized marijuana. Before the government makes a decision about the legality of the medical use of marijuana, they should weigh the influences that marijuana has on societyRead MoreBenefits Of Using Guava Leaves1387 Words   |  6 PagesLeaves Herbal medicine has always been a part of the different cultures of the world. According to Woodham et al. (2000), herbs has played a very important part in the field of medicine for thousands of years. Looking back to the development of Herbalism in ancient Egypt, the comprehensive knowledge of the Greeks in herbal medicine, to the traditional way of Herbal Medicine in China, herbs have been a part of many therapeutic treatments found in many different parts of the world at different timesRead MoreEssay on Legalizing Medical Marijuana1254 Words   |  6 PagesShould medical marijuana be legal across the United States? Imagine a world where individuals who have chronic pain did not have to suffer anymore. Envision a cure for cancer, a disease many Americans are killed by daily. Picture people with severe, violent mood disorders being treated. Most people think the answers to these problems are simple and could be solved by over medicating patients. Today, there are twenty states i n America who have legalized medical marijuana for specific health and medicalRead MoreEpidemic of Designer Drugs3226 Words   |  13 PagesHurst, Penn, and Yung (2012), â€Å"Designer drugs are synthetic compounds that contain modified molecular structures of illegal or controlled substances. They are produced clandestinely with the intent to elicit effects similar to controlled substances while circumventing existing drug laws† (p. 1041). There are two types of designer drugs that have become an outbreak to the world that is seen today and those are called synthetic cannabinoid and synthetic cathinones (Loeffler et al., 2012). These drugsRead MoreShould Medical Marijuana Be Legal?1778 Words   |  8 PagesThere are studies on both sides of the question that demonstrate what appear to be clear benefits for medical marijuana, as well as long-term studies which suggest a number of risks involved with its use. Even though Marijuana carries several side effects to its user, do the benefits of using Marijuana for pain management outweigh the risks? The main questions I will be addressing in this research essay are: 1. Is there any medical health benefits associated with medical marijuana? 2. What medicalRead MoreUnderstanding Cannabinoids And Their Effects2037 Words   |  9 PagesUnderstanding Cannabinoids Join us (and the rest of the world) in somewhat understanding cannabinoids and their effects. Understanding cannabinoids as a layman seems to be only slightly less confusing than understanding them as a scientist. That’s not entirely true, but we are talking about a system within the human body with who-knows-how-many receptors and we’ve identified exactly two in the last twenty years. Which is great, because new science is fun, and the concept of understanding cannabinoids is definitelyRead MoreThe Issue Of Legalization Of Marijuana1605 Words   |  7 Pagesâ€Å"The illegality of cannabis is outrageous, an impediment to full utilization of a drug which helps produce the serenity and insight, sensitivity and fellowship so desperately needed in this increasingly mad and dangerous world.† This was said by one of the most famous scientists in the United States known as Carl Sagan. Marijuana has been one of the most debated topics in the media today, and numerous years before. Altogether, this debate has raised many questions, yet with very few answers of w hetherRead MoreWhy Marijuana Should Be Legal Essay1482 Words   |  6 PagesStrouse â€Å"Marijuana refers to naturally grown plant materials not regulated by the food and drug administration and procured by patients from legal marijuna dispensaries or street suppliers† (7). While carefully examined by many people all around the world, the benefits of using marijuana easily outweigh the disadvantages of the plant. Although many argue that it can lead to further drug use, the plant has showed nothing but leverage to people who have serious illness and chronic pain. According to the

A Risk Well Worth the Reward free essay sample

From a young age I’ve developed an ability to evaluate, analyze, and asses the factor of risk when making a decision. I picked this up from my father, who influenced me through his logically thorough nature. Any question along the lines of ‘hey dad, why don’t we do this?’ has always been answered with a voice of reason, a product of evaluating the probability and favorability of every different outcome. I’ve always admired this inherent quality about my father, and know that he would have never been a Chief Risk Officer unless he set an example worth paying attention to in this regard. I try to mimic my father’s method of ensuring that the right decision is made through weighing the risk versus the reward for all of my options, and last fall this proved to be worthwhile on the soccer field. Soccer has been my sport of choice for as long as I can remember. We will write a custom essay sample on A Risk Well Worth the Reward or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page My love for the game had always been there, but it wasn’t until I was in sixth grade that I gained any real aspirations for my soccer career. I watched my older brother win Connecticut state championship with his Varsity team, and from the moment that I watched his team bask in the glory of a state title I knew that every season of youth soccer that I played would all be building up to the pinnacle of my days as a soccer player when I would play for that same team in high school. Hockey and Baseball always kept me from trying to become one of select few dedicated year round soccer players who played Varsity as an underclassmen. However, I knew that I was good enough to play Varsity for my final two years as an upperclassmen. I could feel the blood rushing to my face when I gaped in disbelief at the list that designated me to the JV group for the final two days of tryouts. Anger was my immediate reaction because I felt as if I had played very well at tryouts and I couldn’t help but feel that I had been overlooked. Devastated at the thought of not making the team as a junior, in my subconscious I hatched a plan to show up at the Varsity session the next morning ready to play and pretend as if I had gotten the times mixed up. Naturally I second guessed this unorthodox plan but reassured myself when I considered what I had to lose by at least trying compared to what I had to gain. Sure enough, my plan went smoothly and after tryouts had ended I had been assigned as a practice player with the Varsity team. Although I didn’t have a jersey and I wasn’t in the team picture, I already felt like the risk I took had payed off; the only thing I could do was give it 110% at practice and hope for the best. After an abundance of injuries had plagued our offense, I finally got my chance at striker in a critical late season game. Prior to taking the field, I took a moment to gather my thoughts and wrapped my mind around the fact that this was my chance to reap the benefits of my hard work. ‘You deserve this. Go out there and show everyone why you deserve to play on this team’ I told myself. Long story short, the part that I played in orchestrating the winning goal impressed my coaches to say the least, and quicker than I could blink I had earned the starting spot at striker for the playoffs. A few days later as our team lineup was being announced in front of by far the largest crowd I had ever played in front of, the announcer called out another kid’s name and the wrong number for me as I wasn’t even on the roster. Despite the nervous anticipation twisting in my stomach, I had to take a second to laugh and thanked myself for my perseverance at tryout s. The only reason I had been given this opportunity was because I refused to go unnoticed and decided to get myself noticed the only way I knew how. No, we didn’t win any championships last year, but regardless I’m sure that I’ll remember last season for a long time to come. The foresight that I had to evaluate the risk of perhaps getting yelled at by a coach for showing up at the wrong time versus the potential at stake has caused me to truly believe that a risk is only worth taking if the measure of risk is equal to or exceeded by the opportunity for which you’re taking the risk. My friends may have scoffed at me back then for trying so hard to get on the team, but in the end they were the ones watching me in the stands, and for that I am forever grateful that I took the risk that I did last fall.

Cost Theory free essay sample

Once a plant owner spends money to manufacture goods, that money is no longer available for something else. Production facilities, machinery used in the production process and plant workers are all examples of costs. Cost theory offers an approach to understanding the costs of production that allows firms to determine the level of output that reaps the greatest level of profit at the least cost. 2. Features * Cost theory contains various measures of costs. These include a firms fixed costs and variable costs. The former do not vary with the quantity of goods produced. Rent on a facility is an example of a fixed cost. Variable costs change with the quantity produced. If increased production requires more workers, for example, those workers wages are variable costs. The sum of fixed and variable costs is a firms total costs. * Additional Measures * Cost theory derives two additional cost measures. Average total cost is the total cost divided by the number of goods produced. Marginal cost is the increase in total cost that results from increasing production by one unit of output. Marginalsincluding marginal costs and marginal revenueare key concepts in mainstream economic thought. Falling and Rising Costs * Economists often use graphs, similar to supply-and-demand charts, to illustrate cost theory and firms decisions about production. An average total cost curve is a U-shaped curve on an economic diagram. This shape illustrates how average total costs decline as output rises and then rise as marginal costs increase. Average total costs decline at first because as production rises, average costs are distributed over a larger number of units of output. Eventually, marginal costs of increasing output rise, which increases average total costs. Maximizing Profits * Economic theory holds that the goal of a firm is to maximize profit, which equals total revenue minus total cost. Determining a level of production that generates the greatest level of profit is an important consideration, one that means paying attention to marginal costs, as well as marginal revenue (the increase in revenue arising from an increase in output). Under cost theory, as long as marginal revenue exceeds marginal cost, increasing production will raise profit. Types of Cost Economics Economists factor costs in many different ways. Though you may read the cost of a soup can at $1 as it’s listed on the grocery store shelf, economists view the cost of the soup can in very different ways. For example, an economist asks what you are giving up to buy that can of soup over another item. They measure the firm’s cost of producing that soup can as it relates to their output and factors of production. Thus, the different types of economic costs are varied. 1. Sunk Cost * A sunk cost is an expense that cannot be recouped. Mark Hirschy, author of the book, â€Å"Fundamentals of Managerial Economics,† explains that sunk costs should not factor into a decision when deciding between alternatives. For example, say a person spent $50,000 on a degree in education and earns $60,000 as a teacher. She is later offered a job in marketing that pays her $80,000. Though she may be tempted to factor in her education degree as reason to stay in her current teaching job, her $50,000 degree is regarded as a sunk cost. She already spent this money, and it cannot be recouped. In this case, she should only compare the respective salaries of the positions. If all else is held equal, she should pursue the marketing job. Opportunity Cost * An opportunity cost is the value of an alternative choice. Though the word â€Å"cost† usually equates to a numerical value, like a dollar figure, this is not always the case. William Baumol and Alan Blinder, authors of the book, Economics: Principles and Policy, state that an opportunity cost calculates intangible things like time, location and job satisfaction. They explain opportunity costs are what you give up to follow one course of action. For example, a college graduate is deciding between a job as a tech consultant in Seattle or an investment broker in New York City. If the grad pursues the investment broker position, the opportunity costs of foregoing the job in Seattle could be a slower pace of life, $10,000 higher salary and lower costs of living like rent and food. * Marginal Cost * A marginal cost is the amount it takes to produce one more item. Under this view of costs, they vary along the production line and in most cases the cost to produce a good reduces over time. Intuitively, this makes sense: the more proficient you become at producing a good, the faster you can do it and less waste is produced. The savings in labor and material as you achieve â€Å"economies of scale† means the cost of production usually decreases. The way economists find the marginal cost is by taking the derivative of the total costs as it relates to the total output. How to Find Marginal Cost in Economics Deciding whether to produce more units is often based on marginal cost. The economic concept of marginal cost is the cost associated with producing one additional unit. This information is important to businesses because it allows the company to decide if the additional unit is worth producing from a financial standpoint. When a company produces a small amount of product, the cost of additional units often decrease. However, marginal costs increase when additional units are added once the production level reaches a minimum. This is based on the law of diminishing marginal returns. Instructions 1. * 1 Calculate the change in total variable cost. This is the amount that the costs increased by after additional units are produced. For example, if youd like to produce more T-shirts and the increase in output would change the costs by $100, then the total variable cost is $100. * 2 Find the change in quantity produced. This represents how many additional units you would like to produce in the given scenario. For example, the change in quantity would be 50 if youd like to produce 300 T-shirts instead of 250. * 3 Divide the change in total variable costs from Step 1 by the change in quantity from Step 2. This will give you the marginal cost (marginal cost = the change in total variable cost/the change in quantity). For this example, $100 (the change in total variable cost) / 50 (the change in quantity) = $2 in marginal costs, which is the cost of producing each additional T-shirt. What Is the Relationship Between Production amp; Cost? Production costs are linked to th e cost of materials and labor. The relationship between production and cost in any manufacturing process varies based on volume produced and whether any part of the manufacturing process is outsourced or performed by subcontractors. Additionally, production and cost ratios vary based on the amount of automation involved in production and the amount of human oversight and involvement required. 1. Factors of Production * The main factors of production are labor, capital and supply costs. Capital is defined as equipment, cash reserves, and physical location or production facility. Labor is defined as the amount of and cost of manpower required to bring a product to market. This includes not only the physical labor and oversight related to product production, but also the associated costs of salaries of positions such as managers, delivery drivers, warehouse supervisors, marketing directors and even administrative assistance. Supply costs are any fee associated with securing necessary materials for production. Subcontractor or outsourced work is considered a supply cost as well, as the manufacturer is essentially purchasing a product or service for use in the production process. In this example, work such as offsite creation of product packaging or assembly of minor components of a finished product are considered supply costs in the same way the purchase of raw materials are considered supply costs. Volume of Production * Volume of production figures signify the amount of products being produced. Typically, the greater the volume the lower the cost per unit as raw material suppliers often offer discounts on mass or bulk orders. Volume of production is based on a company’s anticipated product needs, past sales records and placed orders. * Volume of Business * The relationship between production and cost is frequently determined by the volume of business a company is doing. An example that illustrates this point is a multinational vitamin supplement company that produces vitamins in bulk compared to a small health food chain that produces its own vitamin line in small quantities. The cost of the product produced by the small company will typically be greater than the cost of the product offered by the bulk manufacturer because the smaller company produces its product in smaller volumes. Price Points The more it costs a company to produce a product, the greater price the company will have to charge consumers. A company’s production costs include the price of materials, the cost of manpower, the production and packaging process, advertising, and distribution. Mass producers may be able to offer more competitive pricing to end users because they have the luxury of working on a thin margin due to the large volume of production. In microeconomics, the long run is the conceptual time period in which there are no fixed factors of production as to changing the output level by changing the capital stock or by entering or leaving an industry. The long run contrasts with the short run, in which some factors are variable and others are fixed, constraining entry or exit from an industry. In macroeconomics, the long run is the period when the general price level, contractual wage rates, and expectations adjust fully to the state of the economy, in contrast to the short run when these variables may not fully adjust. [1] In the long run, firms change production levels in response to (expected) economic profits or losses, and the land, labor, capital goods and entrepreneurship vary to reach associated long-run average cost. In the simplified case of plant capacity as the only fixed factor, a generic firm can make these changes in the long run: * enter an industry in response to (expected) profits * leave an industry in response to losses * increase its plant in response to profits * decrease its plant in response to losses. Long-run average-cost curve with economies of scale to Q2 and diseconomies of scale thereafter. The long run is associated with the long-run average cost (LRAC) curve in microeconomic models along which a firm would minimize its average cost (cost per unit) for each respective long-run quantity of output. Long-run marginal cost (LRMC) is the added cost of providing an additional unit of service or commodity from changing capacity level to reach the lowest cost associated with that extra output. LRMC equalling price is efficient as to resource allocation in the long run. The concept of long-run cost is also used in determining whether the long-run expected to induce the firm to remain in the industry or shut down production there. In long-run equilibrium of an industry in which perfect competition prevails, the LRMC = Long run average LRAC at the minimum LRAC and associated output. The shape of the long-run marginal and average costs curves is determined by economies of scale. The long run is a planning and implementation stage. [2][3] Here a firm may decide that it needs to produce on a larger scale by building a new plant or adding a production line. The firm may decide that new technology should be incorporated into its production process. The firm thus considers all its long-run production options and selects the optimal combination of inputs and technology for its long-run urposes. [4] The optimal combination of inputs is the least-cost combination of inputs for desired level of output when all inputs are variable. [3] Once the decisions are made and implemented and production begins, the firm is operating in the short run with fixed and variable inputs. [3][5] Short run All production in real time occurs in the short run. The short run is the conceptual time period in which at least one factor of production is fixed in amount and others are variable in am ount. Costs that are fixed, say from existing plant size, have no impact on a firms short-run decisions, since only variable costs and revenues affect short-run profits. Such fixed costs raise the associated short-run average cost of an output long-run average cost if the amount of the fixed factor is better suited for a different output level. In the short run, a firm can raise output by increasing the amount of the variable factor(s), say labor through overtime. A generic firm already producing in an industry can make three changes in the short run as a response to reach a posited equilibrium: * increase production decrease production * shut down. In the short run, a profit-maximizing firm will: * increase production if marginal cost is less than marginal revenue (added revenue per additional unit of output); * decrease production if marginal cost is greater than marginal revenue; * continue producing if average variable cost is less than price per unit, even if average total cost is gre ater than price; * shut down if average variable cost is greater than price at each level of output. Transition from short run to long run The transition from the short run to the long run may be done by considering some short-run equilibrium that is also a long-run equilibrium as to supply and demand, then comparing that state against a new short-run and long-run equilibrium state from a change that disturbs equilibrium, say in the sales-tax rate, tracing out the short-run adjustment first, then the long-run adjustment. Each is an example of comparative statics. Alfred Marshall (1890) pioneered in comparative-static period analysis. [6] He istinguished between the temporary or market period (with output fixed), the short period, and the long period. Classic contemporary graphical and formal treatments include those of Jacob Viner (1931),[7] John Hicks (1939),[8] and Paul Samuelson (1947). [9] The law of diminishing marginal returns The law of diminishing marginal returns to a variable factor applies to the short run. [10] It posits an effect of decreased added or marginal product of from variable factors, which increas es the supply price of added output. [11] The law is related to a positive slope of the short-run marginal-cost curve. 12] Macroeconomic usages The usage of long run and short run in macroeconomics differs somewhat from the above microeconomic usage. J. M. Keynes (1936) emphasized fundamental factors of a market economy that might result in prolonged periods away from full-employment. [13] In later macro usage, the long run is the period in which the price level for the economy is completely flexible as to shifts in aggregate demand and aggregate supply. In addition there is full mobility of labor and capital between sectors of the economy and full capital mobility between nations. In the short run none of these conditions need fully hold. The price is sticky or fixed as to changes in aggregate demand or supply, capital is not fully mobile between sectors, and capital is not fully mobile to interest rate differences among countries amp; fixed exchange rates. [14] A famous critique of neglecting short-run analysis was by John Maynard Keynes, who wrote that In the long run, we are all dead, referring to the long-run proposition of the quantity theory of, for example, a doubling of the money supply doubling the price level. 15] Marginal  Analysis Thinking at the  Margin From Mike Moffatt, former About. com Guide From an economists perspective, making choices involves making decisions at the margin that is, making decisions based on small changes in resources: * How should I spend the next hour? * How should I spend the next dollar? On the surface, this seems like a strange way of considering the choices made by people and firms. It is rare that someone would consciously ask themselves How will I spend dollar number 24,387? , How will I spend dollar number 24,388? . Treating the problem in this matter does have some distinct advantages: * Doing so leads to the optimal decisions being made, subject to preferences, resources and informational constraints. * It makes the problem less messy from an analytic point of view, as we are not trying to analyze a million decisions at once. * While this does not exactly mimic conscious decision making processes, it does provide results similar to the decisions people actually make. That is, people may not think using this method, but the decisions they make are as if they do. Marginal Analysis An Example Consider the decision on how many hours to work, as given by the following chart: Hour Hourly Wage Value of Time Hour 1 $10 $2 Hour 2 $10 $2 Hour 3 $10 $3 Hour 4 $10 $3 Hour 5 $10 $4 Hour 6 $10 $5 Hour 7 $10 $6 Hour 8 $10 $8 Hour 9 $15 $9 Hour 10 $15 $12 Hour 11 $15 $18 Hour 12 $15 $20 The hourly wage represents what I earn for working an extra hour it is the marginal gain or the marginal benefit. The value of time is essentially an opportunity cost it is how much I value having that hour off. In this example it represents a marginal cost what it costs me by working an additional hour. The increase in marginal costs is a common phenomenon; I do not mind working a few hours since there are 24 hours in a day. I still have plenty of time to do other things. However, as I start to work more hours it reduces the number of hours I have for other activities. I have to start giving up more and more valuable opportunities to work those extra hours. It is clear that I should work the first hour, as I gain $10 in marginal benefits and lose only $2 in marginal costs, for a net gain of $8. By the same logic I should work the second and third hours as well. I will want to work until which time the marginal cost exceeds the marginal benefit. I will want to work the 10th hour as I receive a net benefit of #3 (marginal benefit of $15, marginal cost of $12). However, I will not want to work the 11th hour, as the marginal cost ($18) exceeds the marginal benefit ($15) by three dollars. Thus marginal analysis suggests that rational maximizing behavior is to work for 10 hours. Next Lesson: Market Distortions: Altering the Supply and Demand Equilibrium. Marginal Analysis * Marginal Revenue Glossary Dictionary Definition of Marginal Revenue * Marginal Significance Value Glossary Dictionary Definition of Marginal Si * Marginal Revenue and Marginal Cost Practice Question Related Articles * Running a Private Practice Working with Animals * Work Stress Long Work Hours Are Not the Culprit * Open for Business: Scheduling Your Week Being a Personal Trainer * Three Union Work Rules That Increase the Cost of Operating Transit * Hold On to Your Sanity Start Your Own Business AN INTRODUCTION TO COST BENEFIT ANALYSIS| * Background * Cost-Benefit Analysis (CBA) estimates and totals up the equivalent money value of the benefits and costs to the community of projects to establish whether they are worthwhile. These projects may be dams and highways or can be training programs and health care systems. * The idea of this economic accounting originated with Jules Dupuit, a French engineer whose 1848 article is still worth reading. The British economist, Alfred Marshall, formulated some of the formal concepts that are at the foundation of CBA. But the practical development of CBA came as a result of the impetus provided by the Federal Navigation Act of 1936. This act required that the U. S. Corps of Engineers carry out projects for the improvement of the waterway system when the total benefits of a project to whomsoever they accrue exceed the costs of that project. Thus, the Corps of Engineers had created systematic methods for measuring such benefits and costs. The engineers of the Corps did this without much, if any, assistance from the economics profession. It wasnt until about twenty years later in the 1950s that economists tried to provide a rigorous, consistent set of methods for measuring benefits and costs and deciding whether a project is worthwhile. Some technical issues of CBA have not been wholly resolved even now but the fundamental presented in the following are well established. * Principles of Cost Benefit Analysis * One of the problems of CBA is that the computation of many components of benefits and costs is intuitively obvious but that there are others for which intuition fails to suggest methods of measurement. Therefore some basic principles are needed as a guide. There Must Be a Common Unit of Measurement * In order to reach a conclusion as to the desirability of a project all aspects of the project, positive and negative, must be expressed in terms of a common unit; i. e. , there must be a bottom line. The most convenient common unit is money. This means that all benefits and costs of a project should be measured in terms of their equivalent money value. A program may provide benefits which are not directly expressed in terms of dollars but there is some amount of money the recipients of the benefits would consider just as good as the projects benefits. For example, a project may provide for the elderly in an area a free monthly visit to a doctor. The value of that benefit to an elderly recipient is the minimum amount of money that that recipient would take instead of the medical care. This could be less than the market value of the medical care provided. It is assumed that more esoteric benefits such as from preserving open space or historic sites have a finite equivalent money value to the public. * Not only do the benefits and costs of a project have to be expressed in terms of equivalent money value, but they have to be expressed in terms of dollars of a particular time. This is not just due to the differences in the value of dollars at different times because of inflation. A dollar available five years from now is not as good as a dollar available now. This is because a dollar available now can be invested and earn interest for five years and would be worth more than a dollar in five years. If the interest rate is r then a dollar invested for t years will grow to be (1+r)t. Therefore the amount of money that would have to be deposited now so that it would grow to be one dollar t years in the future is (1+r)-t. This called the discounted value or present value of a dollar available t years in the future. * When the dollar value of benefits at some time in the future is multiplied by the discounted value of one dollar at that time in the future the result is discounted present value of that benefit of the project. The same thing applies to costs. The net benefit of the projects is just the sum of the present value of the benefits less the present value of the costs. * The choice of the appropriate interest rate to use for the discounting is a separate issue that will be treated later in this paper. CBA Valuations Should Represent Consumers or Producers Valuations As Revealed by Their Actual Behavior * The valuation of benefits and costs should reflect preferences revealed by choices which have been made. For example, improvements in transportation frequently involve saving time. The question is how to measure the money value of that time saved. The value should not be merely what transportat ion planners think time should be worth or even what people say their time is worth. The value of time should be that which the public reveals their time is worth through choices involving tradeoffs between time and money. If people have a choice of parking close to their destination for a fee of 50 cents or parking farther away and spending 5 minutes more walking and they always choose to spend the money and save the time and effort then they have revealed that their time is more valuable to them than 10 cents per minute. If they were indifferent between the two choices they would have revealed that the value of their time to them was exactly 10 cents per minute. * The most challenging part of CBA is finding past choices which reveal the tradeoffs and equivalencies in preferences. For example, the valuation of the benefit of cleaner air could be established by finding how much less people paid for housing in more polluted areas which otherwise was identical in characteristics and location to housing in less polluted areas. Generally the value of cleaner air to people as revealed by the hard market choices seems to be less than their rhetorical valuation of clean air. * Benefits Are Usually Measured by Market Choices * When consumers make purchases at market prices they reveal that the things they buy are at least as beneficial to them as the money they relinquish. Consumers will increase their consumption of any commodity up to the point where the benefit of an additional unit (marginal benefit) is equal to the marginal cost to them of that unit, the market price. Therefore for any consumer buying some of a commodity, the marginal benefit is equal to the market price. The marginal benefit will decline with the amount consumed just as the market price has to decline to get consumers to consume a greater quantity of the commodity. The relationship between the market price and the quantity consumed is called the demand schedule. Thus the demand schedule provides the information about marginal benefit that is needed to place a money value on an increase in consumption. * Gross Benefits of an Increase in Consumption is an Area Under the Demand Curve * The increase in benefits resulting from an increase in consumption is the sum of the marginal benefit times each incremental increase in consumption. As the incremental increases considered are taken as smaller and smaller the sum goes to the area under the marginal benefit curve. But the marginal benefit curve is the same as the demand curve so the increase in benefits is the area under the demand curve. As shown in Figure 1 the area is over the range from the lower limit of consumption before the increase to consumption after the increase. * Figure 1 * When the increase in consumption is small compared to the total consumption the gross benefit is adequately approximated, as is shown in a welfare analysis, by the market value of the increased consumption; i. e. , market price times the increase in consumption. * Some Measurements of Benefits Require the Valuation of Human Life * It is sometimes necessary in CBA to evaluate the benefit of saving human lives. There is considerable antipathy in the general public to the idea of placing a dollar value on human life. Economists recognize that it is impossible to fund every project which promises to save a human life and that some rational basis is needed to select which projects are approved and which are turned down. The controversy is defused when it is recognized that the benefit of such projects is in reducing the risk of death. There are many cases in which people voluntarily accept increased risks in return for higher pay, such as in the oil fields or mining, or for time savings in higher speed in automobile travel. These choices can be used to estimate the personal cost people place on increased risk and thus the value to them of reduced risk. This computation is equivalent to placing an economic value on the expected number of lives saved. * The Analysis of a Project Should Involve a With Versus Without Comparison * The impact of a project is the difference between what the situation in the study area would be with and without the project. This that when a project is being evaluated the analysis must estimate not only what the situation would be with the project but also what it would be without the project. For example, in determining the impact of a fixed guideway rapid transit system such as the Bay Area Rapid Transit (BART) in the San Francisco Bay Area the number of rides that would have been taken on an expansion of the bus system should be deducted from the rides provided by BART and likewise the additional costs of such an expanded bus system would be deducted from the costs of BART. In other words, the alternative to the project must be explicitly specified and considered in the evaluation of the project. Note that the with-and-without comparison is not the same as a before-and-after comparison. Another example shows the importance of considering the impacts of a project and a with-and-without comparison. Suppose an irrigation project proposes to increase cotton production in Arizona. If the United States Department of Agriculture limits the cotton production in the U. S. by a system of quotas then expanded cotton production in Arizona might be offset by a reduction in the cotto n production quota for Mississippi. Thus the impact of the project on cotton production in the U. S. might be zero rather than being the amount of cotton produced by the project. * Cost Benefit Analysis Involves a Particular Study Area The impacts of a project are defined for a particular study area, be it a city, region, state, nation or the world. In the above example concerning cotton the impact of the project might be zero for the nation but still be a positive amount for Arizona. * The nature of the study area is usually specified by the organization sponsoring the analysis. Many effects of a project may net out over one study area but not over a smaller one. The specification of the study area may be arbitrary but it may significantly affect the conclusions of the analysis. * Double Counting of Benefits or Costs Must be Avoided Sometimes an impact of a project can be measured in two or more ways. For example, when an improved highway reduces travel time and the risk of injury the value of property in areas served by the highway will be enhanced. The increase in property values due to the project is a very good way, at least in principle, to measure the benefits of a project. But if the increased property values are included then it is unnecessary to include the value of the time and lives saved by the improvement in the highway. The property value went up because of the benefits of the time saving and the reduced risks. To include both the increase in property values and the time saving and risk reduction would involve double counting. * Decision Criteria for Projects * If the discounted present value of the benefits exceeds the discounted present value of the costs then the project is worthwhile. This is equivalent to the condition that the net benefit must be positive. Another equivalent condition is that the ratio of the present value of the benefits to the present value of the costs must be greater than one. * If there are more than one mutually exclusive project that have positive net present value then there has to be further analysis. From the set of mutually exclusive projects the one that should be selected is the one with the highest net present value. * If the funds required for carrying out all of the projects with positive net present value are less than the funds available this means the discount rate used in computing the present values is too low and does not reflect the true cost of capital. The present values must be recomputed using a higher discount rate. It may take some trial and error to find a discount rate such that the funds required for the projects with a positive net present value is no more than the funds available. Sometimes as an alternative to this procedure people try to select the best projects on the basis of some measure of goodness such as the internal rate of return or the benefit/cost ratio. This is not valid for several reasons. * The magnitude of the ratio of benefits to costs is to a degree arbitrary because some costs such as operating costs may be deducted from benefits and thus not be included in the cost figure. This is called netting out of operating costs. This netting out may be done for some projects and not for others. This manipulation of the benefits and costs will not affect the net benefits but it may change the benefit/cost ratio. However it will not raise the benefit cost ratio which is less than one to above one. For more on this topic see Benefit/ cost Ratio Magnitude. * An Example * To illustrate how CBA might be applied to a project, let us consider a highway improvement such as the extension of Highway 101 into San Jose. The local four-lane highway which carried the freeway and commuter traffic into San Jose did not have a median divider and its inordinate number of fatal head-on collisions led to the name Blood Alley. The improvement of the highway would lead to more capacity which produces time saving and lowers the risk. But inevitably there will be more traffic than was carried by the old highway. * The following is a highly abbreviated analysis using hypothetical data. TRIP DATA| No Extension, Blood Alley Only| 101 Extension and Blood Alley| Rush Hours|   |   | Passenger Trips ( per hour)| 3,000| 4,000| Trip Time (minutes)| 50| 30| Value of Time ($/minute)| $0. 10| $0. 10| Nonrush Hours|   |   | Passenger Trips (per hour)| 500| 555. 55| Trip Time (minutes)| 35| 25| Value of Time ($/minute)| $0. 08| $0. 08| Traffic Fatalities per year)| 12| 6| * The data indicates that for rush-hour trips the time cost of a trip is $5 without the project and $3 with it. It is assumed that the operating cost for a vehicle is unaffected by the project and is $4. * The project lowers the cost of a trip and the public responds by increasing the number of trips taken. There is an increase in consumer surplus both for the trips which would have been taken without the project and for the trips which are stimulated by the project. * For trips which would have been taken anyway the benefit of the project equals the value of the time saved times the number of trips. For the rush-hour trip the project saves $2 and for the nonrush-hour trip it saves $0. 80. For the trips generated by the project the benefit is equal to one half of the value of the time saved times the increase in the number of trips. * The benefits per hour are: TYPE| Trips Which Would Be Taken Anyway| Trips Generated By the Project| Total| Rush Hour| 6,000. 00| 1,000. 00| 7,000. 00| Nonrush Hour| 400. 00| 22. 22| 422. 22| * To convert the benefits to an annual basis one multiplies the hourly benefits of each type of trip times the number of hours per year for that type of trip. There are 260 week days per year and at six rush hours per weekday there are 1560 rush hours per year. This leaves 7200 nonrush hours per year. With these figures the annual benefits are: TYPE| Trips Which Would Be Taken Anyway| Trips Generated By the Project| Total| Rush Hour| $9,360,000| $1,560,000| $10,020,000| Nonrush Hour| $2,880,000| $160,000| $3,040,000| Total| $12,240,000| $1,720,000| $13,960,000| * The value of the reduced fatalities may be computed in terms of the equivalent economic value people place upon their lives when making choices concerning risk and money. If the labor market has wages for occupations of different risks such that people accept an increase in the risk of death of 1/1,000 per year in return for an increase in income of $400 per year then a project that reduces the risk of death in a year by 1/1000 gives a benefit to each person affected by it of $400 per year. The implicit valuation of a life in this case is $400,000. Thus benefit of the reduced risk project is the expected number of lives saved times the implicit value of a life. For the highway project this is 6x$400,000= $2,400,000 annually. * The annual benefits of the project are thus: TYPE OF BENEFIT| VALUE OF BENEFITS PER YEAR| Time Saving| $13,960,000| Reduced Risk| $2,400,000| * Let us assume that this level of benefits continues at a constant rate over a thirty-year lifetime of the project. * The cost of the highway consists of the costs for its right-of-way, its construction and its maintenance. The cost of the right-of-way is the cost of the land and any structures upon it which must be purchased before the construction of the highway can begin. For purposes of this example the cost of right-of-way is taken to be $100 million and it must be paid before any construction can begin. At least part of the right-of- way cost for a highway can be recovered at the end of the lifetime of the highway if it is not rebuilt. For the example it is assumed that all of the right-of-way cost is recoverable at the end of the thirty-year lifetime of the project. The construction cost is $200 million spread evenly over a four-year period. Maintenance cost is $1 million per year once the highway is completed. * The schedule of benefits and costs for the project are as follows: TIME (year)| BENEFITS ($millions)| RIGHT-OF -WAY ($millions)| CONSTRUCTION COSTS $millions)| MAINTENANCE ($millions)| 0| 0| 100| 0| 0| 1-4| 0| 0| 50| 0| 5-29| 16. 36| 0| 0| 1| 30| 16. 36| -100| 0| 1| * The benefits and costs are in constant value dollars; i. e. , there was no price increase included in the analysis. Therefore the discount rate used must be the real interest rate. If the interest rate on long term bonds is 8 percent and the rate of inflation is 6 percent then the real rate of interest is 2 p ercent. Present value of the streams of benefits and costs discounted at a 2 percent back to time zero are as follows:   | PRESENT VALUE $ millions)| Benefits| 304. 11| Costs|   | Right-of-Way| 44. 79| Construction| 190. 39| Maintenance| 18. 59| Total Costs| 253. 77| |   | | Net Benefits| 50. 35| | *independent rounding| * The positive net present value of $50. 35 million and benefit/cost ratio of 1. 2 indicate that the project is worthwhile if the cost of capital is 2 percent. When a discount rate of 3 percent is the benefit/cost ratio is slightly under 1. 0. This means that the internal rate of return is just under 3 percent. When the cost of capital is 3 percent the project is not worthwhile. It should be noted that the market value of the right-of-way understates the opportunity cost of having the land devoted to the highway. The land has a value of $100 million because of its income after property taxes. The economy is paying more for its alternate use but some of the pay ment is diverted for taxes. The discounted presented value of the payments for the alternate use might be more like $150 million instead of $100 million. Another way of making this point is that one of the costs of the highway is that the local governments lose the property tax on the land used. * Summary By reducing the positive and negative impacts of a project to their equivalent money value Cost-Benefit Analysis determines whether on balance the project is worthwhile. The equivalent money value are based upon information derived from consumer and producer market choices; i. e. , the demand and supply schedules for the goods and services affected by the project. Care must be taken to properly allow for such things as inflation. When all this has been considered a worthwhile project is one for which the discounted value of the benefits exceeds the discounted value of the costs; i. . , the net benefits are positive. This is equivalent to the benefit/cost ratio being greater than on e and the internal rate of return being greater than the cost of capital. * History of Cost-Benefit Analysis * CBA has its origins in the water development projects of the U. S. Army Corps of Engineers. The Corps of Engineers had its origins in the French engineers hired by George Washington in the American Revolution. For years the only school of engineering in the United States was the Military Academy at West Point, New York. In 1879, Congress created the Mississippi River Commission to prevent destructive floods. The Commission included civilians but the president had to be an Army engineer and the Corps of Engineers always had veto power over any decision by the Commission. * In 1936 Congress passed the Flood Control Act which contained the wording, the Federal Government should improve or participate in the improvement of navigable waters or their tributaries, including watersheds thereof, for flood-control purposes if the benefits to whomsoever they may accrue are in excess of the estimated costs. The phrase if the benefits to whomsoever they may accrue are in excess of the estimated costs established cost-benefit analysis. Initially the Corps of Engineers developed ad hoc methods for estimating benefits and costs. It wasnt until the 1950s that academic economists discovered that the Corps had developed a system for the economic analysis of public investments. Economists have influenced and improved the Corps methods since then and cost-benefit analysis has been adapted to most areas of public decision-making.