Week #3

Part One: This week we learned about opportunity cost. It is the next best thing we give up in every choice we make. For example if I spend $60 at Chipotle then my opportunity cost, the next best choice I give up, is buying a new video game. But not every choice is one or the other, there is also the trade off. A trade off is when you consider all of the alternatives when making a decision. It is also very closely related to oppoturnity cost. It is most easily seen with the PPF curve. The PPF curve, or production possibilities frontier/cure, is all the possible combinations of making/getting two of anything. Imagine if you will our country, and within our country there are only so many workers. Now this is a perfect world and there is full employment. But even with full employment we can only make 100 tons of a item at a time. Let's then say our country needs two resources. As this is just an example let us choose two resources at random. Why don't we go with butter, and hmm... and how about guns. So our country needs guns and butter and it can only make 100 tons at a time. There are then many choices: 50 each, 25 and 75, 37 and 63, and so on. This is the PPF curve, all of the different choices we could make. Unfortunately I was unavailable for school on Friday and thus missed the best class ever. So this is all I learned this week.

Part 2: Many people become rich, but Bill Gates is on an entirely different level. Many of those that become rich often like to flaunt their riches by buying mansions and Lamborghinis. They tend to spend their money quicker than they got it. That is way they are not as rich as Bill Gates. Of course it is kind of hard to run out of money when you have as much as he has. But besides the point, I believe that Bills Gates got rich because he managed his money. He did not spend all of it at once and saved most of it. He also could have put money into the company so he could get more money. That way when his company became larger he had plenty of extra money to spend on a huge mansion and fancy cars. Bill Gates became rich in part by his company but mostly because of money management.

Homework Week #2

Part 1:   Economists do not think as normal people do. They tend to think logically and do not include morals into their answers. For this reason economists tend to get a bad reputation. However in most cases their reasoning are very well thought out and are good ideas. They talk about scarcity, but not in the way you may think. Most think that if there is a little of something then it is scarce. Economists say that scarcity is when a resource has more than one valuable use. For example water, water is used to keep humans alive. It is also used to keep plants alive; therefore it is scarce. Now you may be thinking "Well what about oxygen? I need it to breathe and i need it for my fireplace. So is it scarce?". I personally would agree but, for reasons unknown, certain economists would tell you different; but I digress. Now many have yet to notice how McDonald's and street gangs are similar. They have the same structures, both have employees then bosses then managers and so on. Only the gangs have different names for it. But essentially everyone starts from the bottom and works up. Gangs just have a much steeper raise in income and they move up the chain. That is a hard decision, a street gang or McDonald's. Every day we make decisions, and although we do not realize it we weigh the pros and cons in every decision we make. This come in handy when we talk about finance. But I am not going to get into that because I was not there. Well thanks for listening and as always, stay frosty bros MD out!

Part 2: Nah just kidding. Which is more valuable? Water or diamonds? Without diamonds there is no more bling. But without water we die. Without water everything changes, plants and animals will all die. Personally this makes water pretty valuable. Diamonds and the other hand, are a luxury. Humans do not need them to survive, but they do help with the economy. People like their beauty so they buy them. That means more money into the economy and more jobs for workers. Even so, water is much more important in the long run. If we lose water then we start to die off. If we lose diamonds we just get sad because we no longer have our bling. However I choose survival over bling. For that reason I believe that water is more valuable than diamonds. Now I am done. Peace!