Changes

2.A meal at McDonald's costs the gas, the food, and taxes. The cost of the food includes the employees' pay, the building, the utilities, and the delivery of food and paper products.  A meal at home only costs to buy the food from the store and time spent cooking it.  So a meal at home is cheaper because you don't have to pay so many transaction costs.

2.A meal at McDonald's costs the gas, the food, and taxes. The cost of the food includes the employees' pay, the building, the utilities, and the delivery of food and paper products.  A meal at home only costs to buy the food from the store and time spent cooking it.  So a meal at home is cheaper because you don't have to pay so many transaction costs.

:Superb.

:Superb, but note that the cost of food itself at McDonald's is not a transaction cost.  Costs tacked onto the food, such as taxes, are.

3.Something is scarce if you have to pay money for it because there is a limited amount of that thing. If there is less of something people are willing to pay more money for it if it is something they need or want, like a Wii at Christmas time. People exaggerate scarcity in their minds when they want to sell something for a lot of money.  They make it seem like there are only a few so people will pay more money for it.

3.Something is scarce if you have to pay money for it because there is a limited amount of that thing. If there is less of something people are willing to pay more money for it if it is something they need or want, like a Wii at Christmas time. People exaggerate scarcity in their minds when they want to sell something for a lot of money.  They make it seem like there are only a few so people will pay more money for it.