Applied Economics
Why do the drive-thru or drive-up ATMs have braille and the blind people do not drive?
Drive-up or drive-thru ATMs are accessible everywhere in the United States, and for this reason, the drive-up has found their way in the United Kingdom (UK). Interestingly, in the UK, the users of the ATMs machine are mostly drivers, but none of whom are blind. Given that most of the drivers are people who are not blind, most of the ATM manufacturers have opted to manufacture universal ATMs that is machines with Braille dots and standalone machines. From this issue, as an economist, one can see the aspect of economic principles that can be used to understand the drive-up ATMs situation. This is an indication of introduction of the banking systems that is established to confront a certain problem of scarcity within the society.
In other words, the answer to the question relates to the economics principles. For example, when the Dick Parkhouse from Barclays bank introduced drive-up ATMs machine with Braille dots in UK, this brought economic implication to the society. Apparently, the introduction of the drive thru ATMs with dots for the blinds people portrays the aspect of economic equilibrium principle, in which the machine makes the UK banking market to establish the aspect of equilibrium, whereby no exploitation of a certain group of people and no opportunities that are unexploited for all individuals within the society.
The introduction of the drive-thru ATMs has also brought the aspect of efficiency within the banking system. As such, most of the financial institutions in the UK are becoming multifunctional through drive-up ATMs that have Braille dots. Since becoming efficient is one of the economic principles, the UK banks are required to continuously keep up with the pace of the ever-changing world through the implementation of ATMs meant to serve the individuals who are blind regardless of the fact that none of the drivers is blind. Since most of the Banking Institutions that are established in the UK have embraced the implementation of ATMs with Braille dots, this makes the banks efficient, which makes the economic in the UK grow larger.
Efficiency in the UK is an important social goal because it makes sure that all individuals in the country can potentially have a larger slice of the economic growth. The machines with Braille dots within the UK market are needed because they offer additional services to all people, as they allow the blind people to read the labels on the entire button. However, although the introduction of ATM with Braille dots makes the banking industry effective for all members of the society, the task is expensive, and therefore, the manufacturer of the ATM should consider implementing universal ATM that can serve both the blind people and people without sight problems. This means that the banking system should not consider making the Braille dots and standalone ATM as the best way for the banking system to implement services that are meant for all individuals within the society. In fact, the ATMs manufacturer should make the standalone ATMs collective, where different individuals with specific weaknesses and abilities can use the machine.
Price Changes and Fluctuation
Price changes and fluctuation remains a core challenge faced by most companies today. Price fluctuation is commonly employed by many companies to ensure that they stimulate demand as one of the causes of price variations in the market. According to Bolarín, Frutos, and Lisec (2011), price fluctuation is a practice that is regularly used by most businesses when the demand decreases to stimulate the falling demand or stimulate the production surplus or shortage. Price fluctuation does not occur because a company has failed to cope up with the market changes, but the activity happens due to changing economic factors. When a company is affected by the problem of price fluctuation within the economy, this may force the firm to operate contrary to its plan, goals, and objective.
When a product is experiencing the problem of price fluctuation and changes, the challenge influences the value of the product, since the problem is brought by the change in demand and other economic factors within the market. For instance, the platinum product has undergone this challenge, in which the problem influenced the strength of the company in the business of automotive industry (Wilburn and Bleiwas 2004). The issue of price fluctuation for platinum started back in 2000, whereby in this year, the average price of platinum and rhodium products decreased by 12 % and 20 % respectively (Hilliard 2000). Statistically, the 2000s era was a period that was worse for platinum product. As such, during the 2000s period, the demand for platinum declined by 40% (2002), since the automakers used the commodity to supplement the buying of metals. In the 2000-2004, the global demand for platinum was not as the way the manufacturers would want it to be, because the total demand for the product has declined (Hilliard 2000). The decline was brought by a decrease in consumption pf jewelry in the U.S. where the sale of the product declined with a 23% (Hilliard 2000).
Back in 2000, a decrease in demand in the automobile sector was quoted as one of the reasons that contributed to the platinum price fluctuation (Hilliard 2000). Hilliard (2000) notes that the issue of platinum price change did little to the Platinum Group Metal (PMG), as this did not influence its capability to explore in the automobile sector because it was expected for demand increase within the automobile industry and jewelry manufacturing industry. With the both automobile and jewelry industry being the primary consumers for Platinum Group Metal (PMG) since 2000, the group has continued to focus on making strong sales, especially where demand is high. Thus, due to the aspect of price fluctuation, Platinum Group Metal (PMG) has managed to make sure that the component makers do not reduce the amount of content presented in the market (Sverdrup and Ragnarsdottir 2016). This is necessary is to maintain the demand of platinum product in the market and make sure that the product trades in a specific price range or it sells its product in an increased price.
Figure 1: The monthly spot price for platinum in USD per troy ounce between June 2008 and June 2016 (Source World Bank Data)
From the experience of 2001, Platinum Group Metal (PMG) has experienced the problem of price fluctuation, whereby for the last eight years (2008-2016) the company has been forced to come up with better ways that are required to deal with changing the prices in the market. The change of the price within the market that Platinum Group Metal (PMG) is operating on is mainly caused by the decrease in demand of the jewelry and other automobile products, but there are other factors that are presented by scholars as causes of price fluctuation for platinum. The number of suppliers is one factors that is determining the platinum price level. Hilliard (2000) says that in the 2000s era South Africa were the major suppliers of platinum, with the suppliers from South Africa providing the market with 73% of the platinum commodity. Russia has also become a key supplier of the commodity, with suppliers from Russia supplying 20% to 30% of the product to the global market (Hilliard 2000). For each of the suppliers to secure long term supply contract, they are forced to set a steady price for the commodity, thus causing the decline of the price of the platinum in the global market.
In a study intending to show why the price of many products in the US are down, but yet to fall in the European nations, it is reported that the macroeconomics factors could be the components that are driving the prices of several commodities down in the United States (Frankel 2014). From the study, Frankel (2014) posits that price fluctuation for products such as platinum has become a typical case in the United States. The article suggests that one of the causes of price fall for products like platinum is the aspect of global economic slowdown that has led to the fall of demand for platinum products. Frankel (2014) quotes monetary policy as another factor causing the fall of the price of the commodity in the global market. In the U.K., monetary policies work under the guidance of specific mechanisms, hence leading to the increase of interest rate, which has an influence on the exchanges rates (Frankel 2014). The high-interest rate strengthens the domestic currencies for individuals’ countries but leads to the decrease of the price of internationally traded products in domestic terms. The monetary policy makes some of the currencies to go down, which means that the product exchanged in the global market will sell at a low price. For example, over the last years the euro has gone down 10% against the dollar and the yen has as well gone down 13% against the U.S currency, thus affecting the prices of many commodity that are traded in terms of dollars (Frankel 2014). This has impacts on the products such as platinum, as they are yet to be traded in terms of other currencies.
In recent years, the demand for the platinum commodity has increased due to the stemmed growth of the automotive catalyst (Yang 2009). However, from the figure above, the price of the commodity has dropped, and it is believed that this has been due to a decrease in demand for the product. Yang (2009) affirms that in 2008, an electricity outage in South Africa led to the stoppage of platinum mining for at about two weeks, which had an influence on the demand for the product in South Africa, as this caused a shortage in the market. The electricity outage in 2008 caused the production of platinum to drop at 3% annually. When the production dropped to 3% the supply of platinum was relatively inelastic, thus creating a shortage in the market. The shortage created demand declined and the total sale of the product within a week was $50. This is to imply that when the demand for platinum was low, which caused the decrease in the price of the product (Krogscheepers and Gossel 2015).
Figure 2: Platinum Daily prices between 24 Oct 2016 and 23 Nov 2016JM Base Price $/0zPlatinum average: $971.22 (Source: http://www.platinum.matthey.com/prices/price-charts)
Figure 3: Platinum 30-day Price (Source: http://www.platinum.matthey.com/)
From the above figures, one can clearly see that the price of platinum has been fluctuating on a daily basis and this may cause a future impact on the price of the product. An important point to note from the figure above involves the factors that are causing the change of platinum as per 24 October to 23 November. The international demand and input cost are among the factors that are making the price of platinum to change drastically. According to Brown (2016), the demand for platinum in vehicles that use gasoline has declined notably in the international market. Apparently, the demand for absolute platinum has increased comprehensively, since 2004. Statistically, since 2004, the demand has risen from 7.23 million to 8.42 million in 2013 (Brown 2016). However, with the demand for auto catalyst component has declined from 3.49 million to 3.12 million since 2004 to 2013, hence making the demand of platinum product to decline drastically. Here, it is clear that Brown (2016) point out that the decrease of demand for auto catalyst, as one of the products that are used to manufacture platinum has brought consequences on the demand of the platinum product. The reason that is leading to the decline of the demand for this product is the prosperity for substitution increase (Zhang, et al., 2016). Consequentially, the fall of the demand for the platinum in gasoline vehicles product and auto catalyst have consequences to the price of the product, as it has led to a drastic fall its cost within the domestic and global market. The volatility caused by the decline of auto catalyst demand and the demand of the platinum product, is leading to the reduction of the supply of the platinum product, which makes the price of the product to go down. Brown (2016) says that the supply of the platinum product to the market is a key determinant of the exchange reference price for the commodity.
Figure 4 (Source: Brown, A.A., 2016. Impact of the macro and micro economic environment on business strategy: a case study on Lonmin Platinum (Doctoral dissertation). University of Witwatersrand, Johannesburg)
Moreover, the mining and processing materials have also had an impact on the price of platinum. The two factors do not influence the price of platinum directly, but indirectly, mining and processing materials are the major determinant of the price of the platinum products within the market (Tilton and Guzmán 2016). Papp, et al. (2008) assert that the change in consumption of the platinum product is defined according to the production process, stocks that are set according to the mining activities, and technological changes. In this case, the researchers show that when the production process is costly, the price of platinum will be set according to cost per unit (Papp, et al. 2008). The case of consumption also relates to the issue of process of production because when the amount of product that is processed is enough in the market, this means that the customers in the market will be satisfied, hence, giving the companies producing platinum to set a price that is efficient and standard to the commodity (Papp, et al. 2008). However, the issue of the reduction in the price of platinum, in this case, is brought by the changes that may occur at the mining site, as this will have an influence on the demand level of the product. Papp, et al. (2008) posit that some issues such as mine or plant opening or closing, strikes, and technology changes may influence the size of the stock that is produced within the plant. When some of these factors are in place, the quantity of the platinum product that supplied in the market will be low, thus, making the demand of a platinum product to decrease. As the law of demand indicates that when the demand for the product goes down makes the price of that product to fall, this implies that when the decrease of demand for platinum is low, the price of the product will also go down (Yagan 2016).
The issue of deflation of the United States dollars, the breakup of some European countries, economic recession, and trade restriction are also key causes of the fall of the price of the platinum product (Papp, et al. 2008). In this case, it is said that in report prepared by U.S Geological Survey and Data Series 140, the prices of metals have been characterized by price fluctuation due to unavoidable factors. The research by Papp, et al. (2008) demonstrates that the metal prices changes only where deflated values are used. Papp, et al. (2008) use a study by Data Series 140 and Geological Survey, to assert that the prices of metal in 2006 ranged from $19, which denoted a fall of the price of metals that was $ 71 in the previous years.
Since the product is mostly sold in the United States market, Europe, and Asian market, in countries such as China, the change in U.S dollars as the currency and economic recession will have impacts on the price of the platinum product (Papp, et al. 2008). The trade restrictions also have a direct impact on the price of platinum; if the trade tariffs are high, the product will be required to be sold at a reasonable price, which may mean that the price of the product may become low than it is expected by the manufacturers.
In conclusion, the discussion presents the factors that cause the price of platinum to fall in the global market. Most of these factors relate to the economic concept, with the aspect of decrease of demand being the major determinant that had led to the price decline price for platinum product. Some of the factors causing the fall of the platinum price product as presented in this study include monetary policy and the issue of slowing economic across the globe. As reports suggest that the price of platinum is declining daily, it is the responsibilities of the product manufacturers to consider the factors that are causing this problem, in order to come up with an amicable solution that will ensure the price of the product is standard and considerate to the consumers and vendors within the global market.
Bibliography
Billies, R., 2016. Get Price Protection–Even Amazon! Available at: http://bfinfosystems.com/get-price-protection-even-amazon [Accessed 27 November 2016]
Bolarín, F. C., Frutos, A. G., and Lisec, A., 2011. Assessing the Impact of Prices Fluctuation on Demand Distortion within a Multi-Echelon Supply Chain. Promet–Traffic andTransportation, 23(2). pp. 131-140
Brown, A.A., 2016. Impact of the macro and micro economic environment on business strategy: a case study on Lonmin Platinum (Doctoral dissertation). University of Witwatersrand, Johannesburg.
Diaz, J.F.T., 2016. Do Scarce Precious Metals Equate to Safe Harbor Investments? The Case of Platinum and Palladium. Economics Research International, 2016.
Frankel, J.A., 2014. Why Are So Many Commodity Prices Down in the U.S. Yet Up in Europe? Available at: http://voxeu.org/article/commodity-prices-down-dollars-euros (Accessed 27 November 2016)
Hilliard, H. E. (2000). Platinum Group Metals. Platinum Group Metals, 59-1.
Johnson Mathew 2016. Precious Metal Management. Price charts. [online] Available at: http://www.platinum.matthey.com/prices/price-charts [Accessed 27 November 2016].
Johnson, M. 2016. Precious Metal Management. Price charts. Available at: http://www.platinum.matthey.com/. [Accessed 27 November 2016]
Krogscheepers, C. and Gossel, S.J., 2015. Input cost and international demand effects on the production of platinum group metals in South Africa. Resources Policy, 45, pp.193-201.
Papp, J.F., Bray, E.L., Edelstein, D.L., Fenton, M.D., Guberman, D.E., Hedrick, J.B., Jorgenson, J.D., Kuck, P.H., Shedd, K.B. and Tolcin, A.C., 2008. Factors that Influence the Price of Al, Cd, Co, Cu, Fe, Ni, Pb, Rare Earth Elements and Zn. US Department of the Interior, US Geological Survey.
Pappas, I., Treacy, S. and Chirik, P.J., 2016. Alkene Hydrosilylation using Tertiary Silanes with α-Diimine Nickel Catalysts. Redox-Active Ligands Promote a Distinct Mechanistic Pathway from Platinum Catalysts. ACS Catalysis, 6(7), pp 4105–4109.
Sverdrup, H.U. and Ragnarsdottir, K.V., 2016. A System Dynamics Model for Platinum Group Metal Supply, Market Price, Depletion of Extractable Amounts, Ore Grade, Recycling and Stocks-In-Use. Resources, Conservation and Recycling, 114, pp.130-152.
Tilton, J. E., and Guzmán, J. I. (2016). Mineral Economics and Policy. New York, NY; Abingdon, Oxon: Press,
Wilburn, D.R. and Bleiwas, D.I., 2004. Platinum-group metals—World supply and demand. US geological survey open-file report, 1224, pp.2004-1224.
Yagan, D., 2016. Supply vs. Demand under an Affirmative Action Ban: Estimates from UC Law Schools. Journal of Public Economics, 137, pp.38-50.
Yang, C.J., 2009. An Impending Platinum Crisis and Its Implications for the Future of the Automobile. Energy Policy, 37(5), pp.1805-1808.
Zhang, J., Everson, M.P., Wallington, T.J., Field, F.R., Roth, R. and Kirchain, R., 2016. Assessing Economic Modulation of Future Critical Materials Use: The Case of Automotive-Related Platinum Group Metals. Environmental Science and Technology.
