Changes

'''3. Define the concept of "scarcity" in your own words, and give an example of how an increase in scarcity for a good or service increases its price. Your example might be a World Series ticket (a good) or a special medical operation (a service), or anything else you can think of that is "scarce" in an economic sense. Extra credit: when do people exaggerate scarcity in their minds?'''

'''3. Define the concept of "scarcity" in your own words, and give an example of how an increase in scarcity for a good or service increases its price. Your example might be a World Series ticket (a good) or a special medical operation (a service), or anything else you can think of that is "scarce" in an economic sense. Extra credit: when do people exaggerate scarcity in their minds?'''

Scarcity is the potential for a good to be bought and sold at a price.  An example of scarcity is: Frank's doodads. Millions of Frank's doodads where in stores when the factory burned down. Suddenly, everyone panics and MUST have a doodad.  People will pay much more even if there is not a shortage, so the store owners can raise prices on their large stocks of doodads and the illusion of scarcity (regular term) will make will make the doodads more scarce (economic term).  Extra credit:  When people are afraid, they will be desperate to buy anything they think will help them survive no matter the price.

Scarcity is the potential for a good to be bought and sold at a price.  An example of increase in scarcity is: Frank's doodads. Millions of Frank's doodads where in stores when the factory burned down. Suddenly, everyone panics and MUST have a doodad.  People will pay much more even if there is not a shortage, so the store owners can raise prices on their large stocks of doodads and the illusion of scarcity (regular term) will make will make the doodads more scarce (economic term).  Extra credit:  When people are afraid, they will be desperate to buy anything they think will help them survive no matter the price.

'''4. What is the “invisible hand”? Discuss what it is, using an example (which could be from the story in the lecture about the making of a pencil).'''

'''4. What is the “invisible hand”? Discuss what it is, using an example (which could be from the story in the lecture about the making of a pencil).'''

'''6. "Caveat emptor" or "carpe diem": pick one of these concepts and explain what it means to you.'''

'''6. "Caveat emptor" or "carpe diem": pick one of these concepts and explain what it means to you.'''

Carpe diem, “seize the day”, means don’t take chances; sell it today because it may be worth nothing tomorrow.

Carpe diem, “seize the day”, means don’t take chances; sell it today because it may be worth nothing tomorrow.