Ch. 10 Economics: Close to Home If I had a Million Dollars
Terms • Scarcity – in short supply, something is scarce if people will buy it for a price • Supply – quantities of a good producers are able to supply • Opportunity cost – something given up in order to obtain something else • Demand – quantities of a good consumers are willing to buy
Terms • Hidden market – potential customers not being served by existing goods or services • Consumers – people who will buy a good or service • Substitution effect - tendency to buy a cheaper substitute of a product • Economics – study of efforts to satisfy unlimited wants through limited resources • Producers – people who produce a good or service
Ch. 10 Economics • Write down what you would do with a million dollars • 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
Choices • G:\Choices and Opportunity Costs lesson plan.docx • Cosby Show - Economic Lesson
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?
Ad Analysis • You need to select three advertisements you have seen on TV, in the paper, magazine, online, etc. • Explain how the advertisements are marketed toward them. How do they appeal to students / public? • How would you do it differently? Explain.
Why Buy? • Explain why teens or adults buy a particular • Brand of cereal • Model of car • Type of sneaker • Item of clothing • Brand of soft drink • What impacts their decision the most? Why?
Sources of Income • What sources of income do you currently have? What are some ways you may increase it? What are the tradeoffs between time and effort for increasing income and funding other activities that do not generate income? • i.e. part time job vs. sports
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 • 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 • Know the supply and demand graph, and understand the cause and effect questions.