7073903271600Assignment 1: Economic Basics
Save this file in your course folder, and name it with Assignment, the section number, and your first initial and last name. For example, Jessie Robinson's assignment for Section 1 would be named Assignment1JRobinson. Type the answers to the assignment questions below. Use complete sentences unless the question says otherwise. You will have more than one day to complete an assignment. At the end of each day, be sure to save your progress. Review Lesson 4 of the Course Overview for instructions about turning in your assignments. Assignment Questions
1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points) Financial planning skills can help you have an organized way of saving you money and prepare you for your future spending. I’ve experienced how difficult it is to save money. Having a financial plan can help you know how much money you can spend and when you can spend it. Also, it can inform you how much extra money you have to spend for yourself. 2. List two examples of goods you have purchased in the past or may purchase in the future. (Complete sentences are not necessary. 0.5 points) Gasoline for my car and an apartment for myself in the future 3. List two examples of services you have purchased in the past or may purchase in the future. (Complete sentences are not necessary. 0.5 points) Car insurance and food delivery
4. One of the functions of money is as a store of value. How does inflation affect money's ability to store value? (3-6 sentences. 2.0 points) Inflation erodes the buying power of money. A loaf of bread still takes just as much time and effort to make today as it took last year, but the price rises because the money value erodes with time. Last year, bread cost $0.99. This year, $1.29. The rise in price comes mainly from two factors, rise in cost of raw materials and inflation causing the dollar to buy less in goods and services. 5. Imagine that you are considering moving to a new country and looking for a job there, but you first want to make sure the country has a strong economy. Describe at least three economic factors that you would want to research as evidence of the economy's strength or weakness, and explain how each factor would affect your decision to move there. (4-6 sentences. 3.0 points) Look at the Gross Domestic Product (GDP). This is the sum of all non-governmental spending. If the GDP has been growing or has been steady over the last 20 or 30 years, then the economy is stable. What has the unemployment rate been over the last 20 years? If the unemployment rate has been 5% or 6%, then there are an adequate number of jobs. What is the cost of living relative to wages? If wages are lower than the cost of living, then you don't want to live in that country. If wages are high relative to the cost of living, then you may want to move to that country. What is the wage? This is another way of asking what most people earn. You don't care about the average, because if 1% of the population earns $10,000,000 a year and 99% of the population earns $10,000 the average is $109,000. This is a poor representation of the economy. Is the economy strong enough to absorb foreigners? You will be a foreigner in this new country. Here is the U. S., American born workers have a much easier time making a living that Latinos who enter the country. 6. Explain which economic system (market, planned, mixed, or traditional) you think is best for consumers. Describe at least one reason why you think this system is best for consumers. (4-7 sentences. 3.0 points) Mixed economies are likely to be the best choice for consumers. Because there is no dominance of a particular ideology (capitalism, socialism, etc), this type of system allows for a wider variety of applying differing methods to a host of problems. In other words, it allows for greater openness and less restriction when considering which ideas are ideal for the situation. 7. In capitalism, most businesses have a profit motive. Describe at least one reason that businesses with a profit motive may be helpful for society and at least one reason that they may be harmful for society. Then, explain whether you think profit motive is a good thing or a bad thing for society. (4-7 sentences. 2.0 points) Capitalism allows people to choose what they want to do(job) , it gives people the right to spend their money where they want. Harmful: the gov't control is very limited, it allows people to dominate the industry. the richer gets richer n the poor gets poorer. 8. Choose a well-known company that you know of, and describe its direct and indirect competitors. Describe at least three direct competitors and three indirect competitors. (6-12 sentences. 3.0 points) You can look at Google. If we focus only on the search function, it's direct competitors are MSFT Bing, Yahoo and ask. Indirect competitors could be Facebook which is essentially a social networking company but via Graph search it is indirectly encroaching on Google's territory. Similarly, Wolfram Alpha could be an indirect competitor as it is in the search business but provides very different information etc. 9. Imagine that you are buying a new computer and comparing different brands and prices. Describe at least two nonprice competition factors you might consider when making your decision. (2-4 sentences. 2.0 points) Dell basically markets completely on service, whereas other market on style and looks. You would also want to consider other hardware/software that would be compatible with your purchase. 10. Describe a real or made up but realistic example of a product that went through a time of scarcity, when demand was greater than the supply. What is the product, and why do you think it became scarce? What happened to the price of the product when it was scarce? (3-6 sentences. 2.0 points) During WWII, there was a lot of scarcity. One example was tires for cars. Rubber comes from trees that grow in the tropics and some of that was in war zones. Also there was high demand for military use so civilians could not get tires. Prices were controlled by the government, otherwise they would have gone very high. 11. Describe a product, and then give an example of a time when the demand for this product might be high and the demand for this product might be low. (2-4 sentences. 2.0 points) Natural Gas is a product that is used to power a few vehicles and heat many houses. In the colder months there is a great demand but in the summer months demand drops off. Ice cream is a treat that is enjoyed all year round but in the summer months demand is much higher. 12. Describe an example of a product that has highly elastic demand. Describe at least two factors that make this product's demand so elastic. (4-6 sentences. 2.0 points) An example of a high elastic demand is jewelry. A good or service is considered to be highly elastic if a slight change in price leads to a sharp change in the quantity demanded or supplied. Usually these kinds of products are readily available in the market and a person may not necessarily need them in his or her daily life.