Difference between revisions of "Economics Homework One Answers - Student Five"

Revision as of 21:04, September 9, 2009

IN PROGRESS:

DeborahB.

1. Give an example of a "good" not in the lecture, and an example of a "service" not in the lecture. One example of a good would be a book - it is an object that you can touch. One example of a service would be a police officer - he is fulfilling daily services towards the people of his town through reprimanding people that may be harmful to the town.

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. 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).The invisible hand is a force that is unseen by humans but yet still has influence in their lives and guides them to help others without even knowing it, when they are doing something that seemingly is only beneficial to themselves. For example, a child could set up a lemonade stand one a hot summer day because he wants money for a bike. He charges 25 cents per cup. It seems to him that he is the only one gaining from this situation, as he is making money for something he wants. Yet someone driving home in the heat of the summer day is gaining from this by getting a cold drink for only a quarter, versus lets say a soda from a vending machine for $1.25 or more.

5. There are many parables by Jesus in the Gospels of Matthew and Luke (and one in Mark) which use familiar concepts of money and economics in order to teach a deeper, more profound spiritual point. Examples are at Matthew 13:18-23 and 44-46; Matthew 18:21-35; Matthew 20:1-16 and 21:33-46; Mark 12:41-44; Luke 7:36-50; Luke 12:13-21; Luke 14:15-24; Luke 15:8-10; Luke 16:1-13 and 19-31; Luke 18:9-14; and Luke 19:11-27. Pick one of these parables and explain both the economic point and the deeper spiritual point. Extra credit: why might the Gospel of Matthew have more economic parables than the Gospel of Mark does?

6. "Caveat emptor" or "carpe diem": pick one of these concepts and explain what it means to you. "Caveat emptor" meaning "let the buyer beware" when purchasing something new. Let's say I get in the mail a letter saying there's a free t-shirt waiting for me if I just sign this paper and send it in. Before jumping in at the opportunity for something free, I better beware and look for any strings attached like the one year subscription to the magazine the shirt is advertising I am signing up for without even knowing!