Task
The interrelated concepts of scarcity, choice, and costs form a basic economic triology a group of three related things . Since most families have financial resources far more limited than their wants, individuals and families face the problem of dealing with money scarcity. Deciding how to use scarce resources is a problem of societies, as well as families. And every choice involves an opportunity cost, which means by deciding to use resources in one way, a decision-maker must give up all opportunities to use them in another way.
Tradeoffs and opportunity costs are associated with decisions at all levels of societies. Complete the next two activities to show your understanding of scarcity and opportunity costs.
Task #1
Download and complete 1.03 Planning the Prom based on the information in the scenario below.
After you have proofread your work for grammar and spelling errors, submit the task to the 1.03 Planning the Prom Dropbox.
Scenario:Your senior class has $9,635 to spend on a school dance. The class may not spend more than this amount on the dance, but it does not have to spend all of the money on the dance. Any money left over can be used for a class project designed to benefit your school or community.
The class has decided that there are three categories of expenditures for the dance:
- hiring a band,
- renting a place to hold the dance, and
- refreshments and decorations.
The Dance Committee provided the information in the table in the task document. Your job is to decide which band to hire, where to hold the dance, and what type of refreshments and decorations to provide. Note: You must select one item from each expenditure category.
Task #2
Download and complete 1.03 Personal Budget based on the information in the scenario below.
Submit your completed work to the 1.03 Personal Budget Dropbox.
Scenario:Last year, Jim Cornelius ("Corny" to his friends) graduated from a two-year technical training school and got a job as a lathe a machine used to shape wood, metal, etc. operator at a nearby manufacturing plant. His salary is now $1,700 per month. He expects to get very small wage increases during the next year or two, but he hopes to be promoted to line inspector in about three years, which will increase his salary by $200 a month.
Corny is sharing an apartment with a high school friend who also works at the plant. They are each spending $365 a month for a two-bedroom apartment and utilities, including local telephone service and cable TV. Corny would like to live alone in a one-bedroom apartment, but he figures that would cost about $560 a month (including utilities).
Corny has a two-year-old compact car on which he owes about $3,000. His monthly car payment is $190. He wants to buy a new car as soon as the one he has now is paid for, and he expects his car payments will be quite a bit higher.
Corny loves to listen to music, and his stereo system is a few years old. He wants to buy a new one. He has saved $300 over the past three months, but he figures that the system he wants will cost at least $1,000. He has good credit, and his credit card has a zero balance. He could charge up to $1,500, but he hates to add to his monthly payments.
Look at Corny's monthly budget in the table on your task document.
- What changes do you think he should make in his monthly spending?
- If you were earning Corny's salary of $1,700 per month, how would you divide it up among these categories or for other things you want?