Pf Assignment 1

Assignment 1: Economic Basics
(24.0 points) 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) 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)
A car and a phone
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) Painting and carpet insulation
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.
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) 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) 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) I would have to consider the size of the product and the storage.
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) Activision gaming went scare in 2011 because of the release of call of duty: black ops. Consumers wanted the game but so many people were buying it all up given that call of duty was a limited edition game. So to solve that problem they jacked the prices up from $35.99 all the way to $59.99.
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) Xbox kinect games will have a high demand in the winter months. Demand will be low in the summer months.
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)