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Chapter 10 Notes Economics

Production takes time and relies on investment from previous years' money to continue. When considering a new product, businesses must weigh the opportunity cost of investment against time and money spent. Americans often value present consumption over future consumption, exemplified by services like one-hour photo that charge more for immediate access. Loans allow for present consumption by borrowing against the future, and interest charges a percentage of the amount borrowed.

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195 views1 page

Chapter 10 Notes Economics

Production takes time and relies on investment from previous years' money to continue. When considering a new product, businesses must weigh the opportunity cost of investment against time and money spent. Americans often value present consumption over future consumption, exemplified by services like one-hour photo that charge more for immediate access. Loans allow for present consumption by borrowing against the future, and interest charges a percentage of the amount borrowed.

Uploaded by

Ross Collier
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Chapter 10 notes Economics 02/05/2007 12:53:00

Ch 10
Production- takes time
• rely on money made from previous years to continue production
• investment= time and money
o must weigh opp. Cost of new product
• Consumption- time
o Am. Value present consumption over future consumption
 EX: one hour photo. (pay more to get right away)
o Loan- Present consumption
o Intrest- percentage of what you borrow
 20,000  5%
 21,000
o IR low- Loan demand goes up
• Diversify – to take out from other peoples money deposited
• Credit- your ability to borrow
• Risk
o Prime rate (lowest interest rate possible)
 Large businesses
 Perfect credit
• Collateral- asset that bank holds until loan paid
o EX: house

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