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.