Changes

Traditionally there were four ways to make money:

Traditionally there were four ways to make money:

(1) Perform labor to earn wages.  This is how most people make most of their money.

*Perform labor to earn wages.  This is how most people make most of their money.

(2) Invest capital to earn interest.  This is what you can do once you save up some money.

*Invest capital to earn interest.  This is what you can do once you save up some money.

(3) Allow someone to use your land in exchange for rent.

*Allow someone to use your land in exchange for rent.

(4) Start a new business to earn profits.  But watch out here: 9 out of 10 new businesses fail!

*Start a new business to earn profits.  But watch out here: 9 out of 10 new businesses fail!

Sounds simple enough, right?  Look around you, and you’ll see people earning money each of the four above ways.  Mostly, you’ll see the first way: get a job and earn some wages.  That entails the least risk and is the easiest for most people.  Adults and teenagers often follow the path of least resistance, and often imitate others.  In economics, that means getting a job to work for a company.  It’s great until the economy goes through a downturn and you get "laid off" (fired), or the job becomes tiresome and tedious, or the boss fires you because he did not like something you said.  Then it’s not so great anymore.  But as a teenager you can earn money from someone else while you are learning how business works.  You need experience and savings before you can even try to make money the other three ways.

Sounds simple enough, right?  Look around you, and you’ll see people earning money each of the four above ways.  Mostly, you’ll see the first way: get a job and earn some wages.  That entails the least risk and is the easiest for most people.  Adults and teenagers often follow the path of least resistance, and often imitate others.  In economics, that means getting a job to work for a company.  It’s great until the economy goes through a downturn and you get "laid off" (fired), or the job becomes tiresome and tedious, or the boss fires you because he did not like something you said.  Then it’s not so great anymore.  But as a teenager you can earn money from someone else while you are learning how business works.  You need experience and savings before you can even try to make money the other three ways.

:*$1000 is loaned to you today at an interest rate of 5%, compounded annually.

:*$1000 is loaned to you today at an interest rate of 5%, compounded annually.

:*After one year, the amount due is $1000 plus 5% of $1000, for a total of $1050.

:*After one year, the amount due is $1000 plus 5% of $1000, for a total of $1050.

:*After two years, the amount due is $1050 plus 5% of $1050, for a total of $1102.50, because the interest on the first year is compounded in calculating the interest for the second year.

:*After two years, the amount due is $1050 plus 5% of $1050, for a total of $1102.50, because the interest on the first year is compounded in calculating the interest for the second year.

:For it will be as when a man going on a journey called his servants and entrusted to them his property; to one he gave five talents, to another two, to another one, to each according to his ability. Then he went away.  

:For it will be as when a man going on a journey called his servants and entrusted to them his property; to one he gave five talents, to another two, to another one, to each according to his ability. Then he went away.  

:He who had received the five talents went at once and traded with them; and he made five talents more. So also, he who had the two talents made two talents more. But he who had received the one talent went and dug in the ground and hid his master's money.   

:He who had received the five talents went at once and traded with them; and he made five talents more. So also, he who had the two talents made two talents more. But he who had received the one talent went and dug in the ground and hid his master's money.   

:Now after a long time the master of those servants came and settled accounts with them. And he who had received the five talents came forward, bringing five talents more, saying, 'Master, you delivered to me five talents; here I have made five talents more.' His master said to him, 'Well done, good and faithful servant; you have been faithful over a little, I will set you over much; enter into the joy of your master.' And he also who had the two talents came forward, saying, 'Master, you delivered to me two talents; here I have made two talents more.' His master said to him, 'Well done, good and faithful servant; you have been faithful over a little, I will set you over much; enter into the joy of your master.' He also who had received the one talent came forward, saying, 'Master, I knew you to be a hard man, reaping where you did not sow, and gathering where you did not winnow; so I was afraid, and I went and hid your talent in the ground. Here you have what is yours.' But his master answered him, 'You wicked and slothful servant! You knew that I reap where I have not sowed, and gather where I have not winnowed? Then you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest. So take the talent from him, and give it to him who has the ten talents.  

 

:For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away. And cast the worthless servant into the outer darkness; there men will weep and gnash their teeth.”

:Now after a long time the master of those servants came and settled accounts with them. And he who had received the five talents came forward, bringing five talents more, saying, 'Master, you delivered to me five talents; here I have made five talents more.' His master said to him, 'Well done, good and faithful servant; you have been faithful over a little, I will set you over much; enter into the joy of your master.' And he also who had the two talents came forward, saying, 'Master, you delivered to me two talents; here I have made two talents more.' His master said to him, 'Well done, good and faithful servant; you have been faithful over a little, I will set you over much; enter into the joy of your master.' He also who had received the one talent came forward, saying, 'Master, I knew you to be a hard man, reaping where you did not sow, and gathering where you did not winnow; so I was afraid, and I went and hid your talent in the ground. Here you have what is yours.' But his master answered him, 'You wicked and slothful servant! You knew that I reap where I have not sowed, and gather where I have not winnowed? Then you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest. So take the talent from him, and give it to him who has the ten talents.

:For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away. And cast the worthless servant into the outer darkness; there men will weep and gnash their teeth.

Jesus was concerned with something far greater than money.  But the point applied to money also:  money does have a time value to it.  Money tomorrow is not worth as much as the same amount of money today.

Jesus was concerned with something far greater than money.  But the point applied to money also:  money does have a time value to it.  Money tomorrow is not worth as much as the same amount of money today.

10.  Nash equilibrium, revisited:  What is the Nash equilibrium for two gas stations (an oligopoly) that are situation immediately across the street from each other?  In other words, what price to they sell at, expressed in terms of one of their cost measures?  Explain the process that reaches that "equilibrium".

10.  Nash equilibrium, revisited:  What is the Nash equilibrium for two gas stations (an oligopoly) that are situation immediately across the street from each other?  In other words, what price to they sell at, expressed in terms of one of their cost measures?  Explain the process that reaches that "equilibrium".

 

[[Category:Economics lectures]]

[[Category:Economics lectures]]

{{DEFAULTSORT: Economics Lecture 12}}

{{DEFAULTSORT: Economics Lecture 12}}