# Ch. 10 Economics: Close to Home If I had a million dollars.

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Ch. 10 Economics: Close to Home If I had a million dollars

Ch. 10 Economics Write down what you would do with a million dollars – top 3 Read pp. 140 – 143 Answer: 1) What is economics? 2) What is scarcity? 3) What is opportunity cost? Complete: #1 a, b, c p.143, #3 p. 143 The Nature of Economics

Ch. 10 Economics Read pp. 144 – 145 Answer: At an auction, what happens to the number of bidders as the price rises? Table 10.1 – on a line graph, plot a demand curve and a supply curve from the data shown. What can you tell about your market from the point at which the two lines intersect?

Ch. 10 Economics

Read pp. 146 – 147 Answer # 1a, b, Write up a quick budget for yourself. What have you bought in the last two weeks, and where did you get the money? How did you decide what to spend the money on?

Ch. 10 Economics Read 150 – 151 It’s a matter of interest: Which option? It depends on the month. In a 31 day month option 2 wins Option 1: \$7.75 million (\$250,000.00 X 31) Option 2: \$10.74 million (.01X.01=.02X.02=.04, etc.

Ch. 10 Economics In a 30 day month option 1 wins Option 1: \$7.5 million Option 2: \$5.37 million (the doubling to \$10.74 million would not be in effect in a 30 day month)

Ch. 10 Economics Principal – sum of money invested or borrowed, not including additional interest payments Interest – money paid for the use of money lent Rate of interest – amount of interest paid on the principal expressed as a %

Ch. 10 Economics Compound interest – interest added to the original invested or borrowed sum, so that further interest is calculated on the original amount, plus interest already earned.

Ch. 10 Economics The “rule of 72” is shown on fig. 10.10. Using this rule you can calculate how long it will take a saved or invested sum of money to double at various interest rates by dividing the number 72 by the interest rate. Calculate how long it would take the sum of \$500.00 to double at the interest rate of 18%.

Ch. 10 Economics The answer is 4 years. 1) If Simion had \$300.00, how many years would it take for it to become \$600.00 at 5% interest? 2) Elise was given \$200.00 for a grad gift. How long will it take to become \$400.00 at an interest rate of 13%?

Ch. 10 Economics Answers: 1) 72 / 5 = 14.4 years 2) 72 / 13 = 5.5 years Always divide 72 by the rate of interest. “Rule of 72”

Ch. 10 Economics Planning the prom activity: Your task is to reach a decision about how the funds should be used for the dance. Prepare an answer for the discussion question. Consider what you want for the dance, but acknowledge what you are giving up for that decision

Ch. 10 Economics You have just come to realize a fellow student has been diagnosed with a major illness. Will this change your decision? What other issues will influence your decision?

Ch. 10 Economics Financial Fable pp. 152 – 154 In this story, Marie demonstrates the importance for producers to know the relationship between supply and demand. How does Marie determine that there is a demand for recycled toys? Where does Marie find a supply source for recycled toys?

Ch. 10 Economics What type of work does Marie have to provide before the recycled toys are ready to sell? How does this improve the value of her product? What does Mr. Russell mean when he says, “get interest working for you instead of working against you and you’ll prosper?”

Ch. 10 Economics Know the following terms for your quiz: Scarcity, supply, opportunity cost, demand, interest, hidden market, rate of interest, principal, consumers, substitution effect, economics, compound interest, producers