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

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

Ch. 10 Economics l Read pp. 144 – 145 l Answer: At an auction, what happens to the number of bidders as the price rises? l 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

Ch. 10 Economics l Read pp. 146 – 147 l Answer # 1 a, b, l 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 l Read 150 – 151 l It’s a matter of interest: Which option? It depends on the month. l In a 31 day month option 2 wins l Option 1: \$7. 75 million (\$250, 000. 00 X 31) l Option 2: \$10. 74 million (. 01 X. 01=. 02 X. 02=. 04, etc.

Ch. 10 Economics l In a 30 day month option 1 wins l Option 1: \$7. 5 million l Option 2: \$5. 37 million (the doubling to \$10. 74 million would not be in effect in a 30 day month)

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

Ch. 10 Economics l 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 l The “rule of 72” is shown on fig. 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 l The answer is 4 years. l 1) If Simion had \$300. 00, how many years would it take for it to become \$600. 00 at 5% interest? l 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 l Answers: l 1) 72 / 5 = 14. 4 years l 2) 72 / 13 = 5. 5 years l Always divide 72 by the rate of interest. “Rule of 72”

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

Ch. 10 Economics l 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?