Spending

Spending—Write a response to this quote. “Bad spending habits can easily destroy you. Bad spending habits don’t usually go away as you get older, which is why they call them habits. In fact, bad spending habits usually get worse with age. That’s why a lot of people I know make tons of money each year, yet they are just about broke at the end of every year. These people will never be able to retire. They will work until the day they die. Bad spending habits can cause big problems in life.” Chad Foster “Financial Literarcy for Teens”

Goods and Services

•Goods ---durable goods are items with lasting value, the purchase of which is considered a form of savings

•Services—intangible equivalent of economic goods. Consumer does not obtain exclusive ownership of the good. (you don’t own the car wash, you just receive the service)

Law of Scarcity

•An economic system cannot produce all goods and services that consumers want, and most consumers do not have the resources to purchase everything they want. Choices must be made about how limited resources (time, money) are used.

Trade-offs and Opportunity Cost The Opportunity Cost of a decision is the value of the next best alternative that must be forgone when making a decision. Opportunity is NOT the same thing as money price. Comparative advantage means having the lowest “opportunity cost” of production.

In achieving certain economic goals, we may have to sacrifice others which is a Trade-off. For example, in solving unemployment we may cause inflation. You give up one thing for another.

Select on of these quotes to write about in Word. Save as Spending 2•“Money doesn’t grow on trees.”

(Anonymous)•“Economy does not lie in sparing money,

but in spending it wisely.” (Thomas Henry Huxley)

•“Riches are no menace if you do not divorce dollars from sense.” (Anonymous)

•“You can’t appreciate home till you’ve left it, money till it's spent.” (O. Henry)

Responsible spending

Includes researching and planning purchases in advance and making wise choices in light of opportunity cost and trade-offs that apply.