Introduction to Economics & Investment Simulation

Economics: The study of scarcity.
Scarcity: The basic economic condition where society lacks sufficient resources to produce all desired goods and services.

Question: Can notes be used on the unit test?
Answer: Notes can be used on the Unit 1 test (covering $7$ to $8\text{ days}$ of material) if all unit assignments are turned in with no missing work or zeros. Otherwise, the test must be taken without notes.

Trade-offs: Alternative options given up whenever a choice is made regarding time, money, or resources.
Opportunity Cost: The single next-best alternative given up when selecting a specific choice.
Hidden Costs: Unforeseen secondary expenses, such as vehicle insurance and licensing fees when buying a car, or taxes taking approximately $30\,\%$ of an official paycheck.

Rationing Tool: A system used to distribute limited resources; price serves as the primary rationing tool in market economies. Historically, civilians rationed goods during World War one and World War two.
Price Dynamics: Increased scarcity drives prices up, whereas resource abundance keeps prices lower (e.g., gold versus sand).
Goods: Tangible items that carry a monetary price tag.
- Durable Goods: Tangible items designed to last $3\text{ years}$ or more (e.g., furniture, major appliances).
- Economic Goods: Tangible, scarce items that carry a price tag.
- Free Goods: Plentiful resources that are not scarce and carry no monetary cost (e.g., air, sunshine).
Services: Work or labor performed by one person for another (e.g., plumbing, haircutting).

Capital Goods: Tools, machinery, and equipment utilized by businesses inside factories to manufacture products ("widgets").
Consumers: Individuals who buy goods and services, representing the demand side of the market with the objective of saving money.
Suppliers: Business owners offering goods and services, representing the supply side with the objective of earning profit.

Simulation Details: Played via buildyourstacks.com (stax.com), simulating a $20\text{-year}$ historical period ( $1989$ to $2009$ ) in $20\text{ minutes}$ ( $1\text{ minute}$ equals $1\text{ year}$ ).
Funding: Players receive $\$4,000$ every $30\text{ seconds}$ , totaling $\$160,000$ in simulated income over $20\text{ minutes}$ .
Investment Vehicles: Options include bank savings accounts, CDs, index funds, stocks, crop commodities (wheat, corn), and gold.
Simulated Companies: Stock options represent real historical companies, including GE, Coke (Coca Cola), American Electric, Ford Motor Company, and Harmonic.
Market Fluctuation: Reflects market declines during major economic downturns, such as the housing bubble crisis in $2007$ and $2008$ .