Discussion for online Economics class - Article Example

The Deal Is Simple. Australia Gets Money, China Gets Australia Chinese investments in the Australian mining sector have grown rapidly in recent years, as China takes center a stage in global economy. Millions of tons of Australian metals and crude oil are moved to China as Australia receives millions of dollars in compensation. According to the article, mining is inelastic since it does not respond to the ideal factors of demand and supply.Mining is controlled forces that are beyond the economic realm, hence its inelastic nature.

For instance, prices of crude oil have insignificant effect on demand due to China’s need for economic superiority. The current position of China in global economy has also contributed to the inelastic nature of its Australian mining sector. For instance, China is more concerned with economic domination rather than profits. Thus, China has vast interests in controlling the mining and energy sector, leading to the inelastic nature of mining. Unlike other commodity such as farm produce and manufactured goods, minerals are increasingly becoming scarce.

This indicates that their economic value increase at a faster rate than their market value. For instance, the market price of a barrel of crude oil is much lower than its economic value. This indicates that demand for oil is not driven by the market value of the product but by its economic value. In a normal economy, a boom is followed by a bust. Currently the Pilbara Region is experiencing an economic boom and, producers are cautious about a possible economic bust. In order to protect themselves against such occurrences, production decisions are not based on income from mineral exports.