Economics Homework One Answers - Student Eight

DuncanB

1. An example of a good is a cell phone; a service is the coverage you need to use it.

Superb.

2. Eating at McDonalds (or any other restaurant) has more transaction costs, two of which are the cost of the gas needed to drive there and the fact that you are not just paying for the food, but the service and tip also.

Correct, but do you really know anyone who gives a tip at McDonalds?! But your point is well-taken for most restaurants. And I'm someone has given tips at McDonalds. Even Dunkin Donuts has a tip jar!

3. Economic scarcity is the condition in which an object costs something, however little, due to a limited supply. The demand for most goods decreases as the price rises. For example, if there are four approximately identical houses near each other in the same neighborhood, many people might make offers on them if their price was only $1 million. If it was raised to $1.5 million, fewer people would attempt to buy them.

Right.

4. The “invisible hand” is the drive for self-improvement within an individual which results in benefit for society. For example, a restaurant owner wants to make his food and service better than that of other comparable restaurants nearby. When he does this, society benefits, as people have a good restaurant to go to.

Excellent.

5. In Luke 16:1-13, a steward is about to be fired for wasting his master’s goods. To live after he is fired he pays off the debtors of his master, so that they will let him live with him after he no longer has a job. This parable’s economic meaning is that while you have power, use it well so that if you fall into bad times others will help you; its spiritual meaning deals with the fact that friends, even non-Christians will help you through tough times if you have helped them and shown them God’s love.

Matthew, before he was a disciple, had been a tax collector, while Luke was a Greek and probably more concerned with truth than money.

Great analysis with extra credit. Plus one.

6. “Caveat emptor,” meaning “let the buyer beware” in Latin, means to me that the customer alone has the responsibility of determining the value of his purchase. The seller can attempt to sell anything he wants, at any price—the customer must evaluate it for himself.

Superb, may use as a model answer.

Terrific start: 61/60.--Andy Schlafly 09:58, 13 September 2009 (EDT)