Economics Homework One Answers - Student Two

1. An example of a good is buying a car. An example of a service would be servicing or repairing that car.

Excellent, except note that the good is "a car," not "buying a car."

2. In this case, eating at home would incur more transaction cost. My reasoning for this is that when you eat at home you must take the time to go to the store to purchase all the ingredients, then you have to time to travel back home. Once at home you must do prep for the food you just bought and then cook the meal. After the meal you must clean up the dishes, the leftovers, etc. Strictly from a monetary point of view, it is cheaper for my family to purchase the food at a market and eat it at home.

OK, but usually someone does not make a new trip to the grocery store for every meal, so that transaction costs of obtaining the ingredients are less than the special trip required to go to McDonalds. In addition, there are preparation costs for McDonalds that the customer must pay for, unlike preparation costs at home. Finally, being cheaper to eat at home from a monetary viewpoint strongly suggests that eating at home has less transaction costs also.

3. The definition of scarcity is goods or services where the availability is less than the demand. An example of this principle would be a wireless phone with all the latest and greatest technology. When it is “brand new” the demand for the phone is often much greater than the availability of the phone. This causes line ups at the stores and people scrambling to buy it. However, when the next generation of phone comes out, the phone that was once scarce is no longer.

Good, except in economics there is still scarcity of the out-of-date technology. That's because it is still worth something, albeit much less. As long as something has a price, even if only a penny, then it is scarce in economic terms. (Minus 1).

4. The invisible hand is the unseen force that guides individuals who are acting to help themselves to work in ways that benefit society. An example of the invisible hand is God or the spirit. We do not see him, he is an unseen force, but he causes us to do things that we think are self serving but ultimately serve others an the ultimate purpose of God.

Good answer.

5. Matthew 13:18-23; 44-46 – From an economic standpoint the remind us to be careful where we spend our money. It reminds us to not foolishly spend it on an item that you do not have a need for, but instead to save it for another purpose. Extra Credit: Why does the Gospel of Matthew have more economic parables? The reason is that Matthew was a tax collector and thus had an intimate knowledge and interest in the economic world of his time.

Your first answer makes a superb point, but applies only to the verses 18-23, but not 44-46, and does not address the spiritual aspect of the question. Good answer to extra credit question. Minus 1 on the regular part of the answer, but plus 1 on the extra credit portion.

6. The phrase Caveat Emptor (buyer beware) to me is like a stop sign. It is letting you know to be careful what you purchase and to look first as it might be harmful to you or somebody else.

Excellent. Might use as a model answer.

59/60. Superb start!--Andy Schlafly 17:57, 10 September 2009 (EDT)