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Econ 537 Homework 1 Answers - #1withAnswers...

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ECON 537 Managerial Economics - Homework # 1 with Answers Session 1  and Session 2  Due: Thursday, Feb 4th in Class  (Only a hardcopy of your solutions will be accepted. NO EMAIL SOLUTIONS PLEASE!! ) You are free to work with other students in the class. However, each student should turn in  his/her own homework assignment. Your answers should be clearly written with complete  sentence and proper grammar. Poorly written homework will result in deducted points or you  may be asked to rewrite the assignment. Multiple Choice (Total 55):  1 . Vernell is planning her activities for a hot summer day.  She would like to go to the local  swimming pool and see the latest blockbuster movie, but because she can only get tickets to the  movie for the same time that the pool is open she can only choose one activity.  This illustrates  the basic principle that a. people respond to incentives. b. rational people think at the margin. c. people face tradeoffs. d. improvements in efficiency sometimes come at the expense of equality. ANS: C 2. People are willing to pay more for a diamond than for a bottle of water because
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