Changes

2.  Imagine that your family has two options for dinner:  eat at home, or go out to eat at McDonald's.  Which option incurs more transaction costs?  Identify two specific transaction costs.  Which option is cheaper for your family, and why?

2.  Imagine that your family has two options for dinner:  eat at home, or go out to eat at McDonald's.  Which option incurs more transaction costs?  Identify two specific transaction costs.  Which option is cheaper for your family, and why?

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.

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?

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).