Pam and Jim are getting married, however a few of their coworkers aren’t prepared to present them cash immediately. Ryan approaches Pam and affords her the selection of $100 now or the chance to get $5,000 a yr from now. Pam is skeptical and initially states she needs the $100. Ryan is ready to finally discuss her into investing in his good friend’s firm.
This is a superb alternative to speak concerning the tradeoffs of threat and reward in addition to introduce the idea of current worth. If Pam accepted the $100, she could possibly flip that into $110 subsequent yr if she discovered a possibility to take a position at 10% curiosity. Ryan is providing an extremely dangerous various that might repay a lot increased. In order for folks to simply accept that a lot threat, the payoff have to be actually giant. Safer investments are inclined to have decrease rates of interest.
Thanks to Allison Anthony for the clip suggestion. You can discover extra economics-inspired clips from The Office on The Economics of The Office web site.