Somali+piracy+costs+8.3bn+a+year,+report+says

Somali piracy costs $8.3 bn a year, report says

 * BBC: http://www.bbc.co.uk/news/world-africa-13392537
 * 13 May, 2011
 * Pirates off the Somalian coast cost the international community up to $8.3 billion a year, estimated to increase up to $13-15 billion by 2015. According to calculations, a pirate can earn up to $79,000 a year. In an impoverished country with few other opportunities, the next best alternative would bring in only $500 annually. Thus, due to a low opportunity cost and a high potential profit, more and more people are resorting to piracy, affecting Africa, the Mediterranean and Pacific Rim Waters.
 * Vocabulary:
 * Supply: How much of something is available.
 * Demand: How much of something people want.
 * Opportunity cost: The cost of any alternative measured in terms of the best alternative foregone.
 * Expected benefits: The advantages or profits that are expected to result from any economic decision made.
 * Risk-adjusted costs: The consequences or payments that result from making any economic decision.
 * [[image:supply_and_demand.gif]]
 * Figure 1: S&D of Pirates
 * According to supply and demand, the supply of job opportunities in Somalia is low, therefore there is high demand for high pay through illegal means.
 * The article is relatively simple in its economics, using simple-to-understand economic terms to show how the supply of pirates is related to the expected benefits of becoming a pirate (high profit) and the associated risk-adjusted costs. I think that the article should include a solution or explain what is being done to keep piracy at a minimum. I think that the federal government should authorize other nations to enter Somalian waters to deal with the pirates. However, from an economic standpoint, improving the economy of the country as a whole and increased job opportunities will lower the supply of pirates and the demand for piracy.
 * The article is relatively simple in its economics, using simple-to-understand economic terms to show how the supply of pirates is related to the expected benefits of becoming a pirate (high profit) and the associated risk-adjusted costs. I think that the article should include a solution or explain what is being done to keep piracy at a minimum. I think that the federal government should authorize other nations to enter Somalian waters to deal with the pirates. However, from an economic standpoint, improving the economy of the country as a whole and increased job opportunities will lower the supply of pirates and the demand for piracy.