Economics!

Learning Target: http://www.jumpstart.org/reality-

check-page1.html

What is the economy?

• The wealth and resources of a country or region in terms of production, and consumption of good and services.

Basic Economic Concepts

There are 4 rules of supply and demand We are going to have a competition between groups

to see who understands how these rules work. I will have each rule on the PowerPoint, each

member must copy down the rule, then I will show an example of how the rule can be applied.

Quietly in your table partner discuss if the answer is 1, 2 or 3. Once you have decided write your answer down. Each group will put there answer in the air when I say,“Everyone show your answers”

Rule 1

• If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price

I have 7 I pads to sell at $400 (supply) but 13 students want to buy them (shortage, not enough for everyone) since there a is higher demand I will…

Will I….1. Keep the price the same2. Lower the price3. Raise the price

Rule 2

• If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.

Fanny packs used to be very popular, then people started stopped thinking they were cool (demand went down) but companies kept making fanny packs (surplus occurred) What happened to the price of fanny packs?

Companies…1. Sold fanny packs for more

money.2. Sold fanny packs for less

money. 3. Sold fanny packs for the

same price they always did.

Rule 3

• If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.

People love Cheetos, and they continue to buy Cheetos just as much as always (demand stays the same) the makers of Cheetos spend millions of dollars on new commercials that are really funny, they decide to make more Cheetos then usual ( supply increases). The commercials are funny but they don’t make people want to eat Cheetos any more than they already do. What happens to the cost of Cheetos?

The company decides to…1. Increase the price of Cheetos because they spent so much on the commercials.2. Keep the price the same, it is the same Cheetos 3. Lower the price, they have too many Cheetos and they need to sell more of them.

Rule 4

• If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.

Middle school and High school students are buying Nike elite 2 layer basketball socks this year just as much as they did last year ( demand is the same) But Nike thought the new craze for 2 layered socks was over so they stopped making as many ( supply lowered). What happened to the price of these socks?

When Nike realized students were still wanted more and more of these socks they…1. Sold these socks for the same price 2. Sold these socks for more money 3. Sold these socks for less, they already chose to make produce

less of these socks

Risk/Reward of Investing

• Have you ever heard of the saying, “ The greater the risk the greater the reward?”

Risk/ Reward of Investing

• In the investing world, the dictionary definition of risk is the chance that an investment's actual return will be different than expected. Risk means you have the possibility of losing some, or even all, of our original investment. 

Low levels of uncertainty (low risk) are though of having low potential returns. High levels of uncertainty (high risk) are thought of having high potential returns. The risk/return tradeoff is the balance between the desire for the lowest possible risk and the highest possible return.

How well do I know the meaning of words

• Economy • Savings account• Certificate of Deposit • Stock • Bond • Supply • Demand • Incentive

Different ways to save and invest • Savings Accounts. If you save your money in a savings account,

the bank or credit union will pay you interest, and you can easily get your money whenever you want it. At most banks, your savings account will be insured by the Federal Deposit Insurance Corporation (FDIC).

Different ways to save and invest

• Certificates of Deposit.• You can earn an even higher interest if you put

your money in a certificate of deposit, or CD, which is also protected by the FDIC. When you buy a CD, you promise that you're going to keep your money in the bank for a certain amount of time.

Why is this true???

Different ways to save and invest

• Stocks.• Have you ever thought that you'd like to own

part of a famous restaurant, or the company that makes the shoes on your feet? That's what happens when you buy stock in a company-you become one of the owners. Your share of the company depends on how many shares of the company's stock you own

• http://www.eaglelakedepot.com/CaneBeltHistory.htm

Stock certificate

Different ways to save and invest

• Bonds.• Many companies borrow money so they can

become even bigger and more successful. One way they borrow money is by selling bonds. When you buy a bond, you're lending your money to the company so it can grow. The company promises to pay you interest and to return your money on a date in the future.

Bond