Dow down 416 pts! - Why?

The Dow Jones Industrial Average went down 416 points on Tuesday. Explain what happened. Why did the Dow go down? How does this decline compare to other famous declines (Great Depression, 1987, 9-11)? What will you do with your stocks? Is this a time to buy since prices went down? Explain.

Jim Rogers, who co-founded the Quantum hedge fund with George Soros in the 1970s said that China stocks descent because there are problems developing. Also the world is surprised by
China's plan to clam down on illegal stock market investiments.
The Dow went down because many people decided to sell their stocks and not as many people bought the stocks that were being sell. Therefore the price went down.
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Opportunity Costs

Opportunity costs is the cost of doing an activity instead of doing something else. We have a choice between two or more alternatives, but we will choose the best alternative for us. Opportunity cost is the best alternative that must be sacrificed in order to get something else you want.

• If a gardener decides to grow carrots, his or her opportunity cost is the alternative crop that might have been grown instead (potatoes, tomatoes, pumpkins, etc.).
• A person has to decide whether to buy a house or live in an apartment and pay the rent, the opportunity cost to buy a house is that the person will pay the mortage but one day the house will be his or hers. Instead if he/she decides to live in an apartment, she/he will pay the rent and the apartment will never be his/hers.
  

Types of Economic Systems

Traditional Economies are found in rural and non-developed countries. It is an economic system in which resources are inherited, and it is based on primitive methods and tools. Economic decisions depend on tradition and custom not market activity. Today it is found mainly in agricultural parts of South America, Asia, and Africa.