What is Economics?
Watch the short informational video below to find out!
Opportunity Cost
Everything is limited. In order to gain something you have to give up something else, this topic is called opportunity cost. For example, if you want to stay up late to play video games you're giving up time you could be sleeping. Before currency was invented people used to barter. If you traded a sock for a shoe, the sock would be your opportunity cost. Now, we have money, which replaces the value of that sock, or whatever item you’re purchasing. Click on the image below to play a fun opportunity cost Kahoot!
Supply and Demand
Inflation
Inflation means the value of the dollar goes down. This typically happens following an increase in the supply of money. As a result more people go and buy items, and eventually the demand will be greater than the supply. So, to lower the demand suppliers will raise the prices of items. This lowers the value of the dollar. Since 2000, $1.73 is now worth a dollar today. If a chocolate bar cost a dollar in 2000, it now costs $1.73 now.
Let’s see the effect of inflation on a bigger price. In 2000, the average price of a car was $21,850, now due to inflation, which results from more money in circulation. It now cost around $38,237.50 for the average car.
