Economics Homework One Answers - Student Fifteen

IsaacZ

1. An example of a "good" would be a lawn mower while a "service" would be someone mowing your lawn for you.

Excellent.

2. The option of choosing McDonald's instead of eating at home would cause more transaction costs. The main transaction costs would be the cost of the gas and the time that it would take to get there. You will also have to pay for the service that you receive from the McDonald's employees. To eat at home would be a much cheaper option as there are hardly any transaction costs.

Superb, may use as a model.

3. Scarcity means the number of people who are willing to pay for a good or service. If the scarcity increases it means that more people want to buy the certain good or service. The more people who are willing pay for it the higher the price will rise. When you buy a ticket for a Yankees baseball game you can choose a seat close or far away from the field. The Seats that are closer to the field are much more expensive. There are many people who are willing to pay money in order to have a special seat close to the field. They feel that the seat close to the field would give them a better view of the game and that it make them look special. They think that because the seat was so expensive that they are some of the few people who were able to get one so close. These people are exaggerating scarcity in their minds. They do not realize that while their seat is so close to the field, they could have watched the game just as well in a different seat. They think that they had to buy this certain seat because it was the only way to properly watch the game.

Good, although your first sentence could be improved by saying that "scarcity means THERE ARE PEOPLE who are willing to pay for a good or service." As far as scarcity increasing, that can be a function of a decrease in supply as well. Plus one for extra credit on the Yankees tickets.

4. The "Invisible Hand" is everyone in a community working for himself which causes the community to flourish. If a person would like to start a company that makes toy soldiers, first he will need to hire people to make the toys as well as designers to design them. He thus gives other people jobs which produce money for themselves. If another person owns a small store and would like to sell toy soldiers he will buy them from the person who makes them. The Toy soldier maker will then be able to pay his workers and make money for himself. Every person in this example is working for himself but is still helping everyone else.

Excellent.

5. In Mark 12:41-44 the old woman only puts a very small amount of money in the poor box while the rich people put large amounts of money. The economic aspect of this story is that while many rich people gave large amounts they were still small compared to what they owned. Whereas the old woman put in more since it was all she had. She had made the economic decision to give all of her money away even though it was so little, but the rich people made the decision to give a away a portion of their wealth. The spiritual aspect is that the woman gave more to the poor in God's eyes while the rich man gave less. Matthew has more economic parables in his gospel because he himself was once a tax collector and was more economically minded.

Superb. Plus one for extra credit.

6.To me, "Carpe diem" means that I should not waste opportunities and always keep watch for safe and beneficial investment.

Excellent.

Terrific work! 62/60. Congratulations.