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Problem Set 1 – Please answer questions in MS Word, then upload your completed document.Question 1:How will commercial airlines respond to the threat of new $27,500 fines for keeping passengers on thetarmac for more than 3 hours? What inefficiency will this create?Question 2:I recently sold my used car. If no new production occurred for this transaction, how could it have createdvalue?Question 3:You were able to purchase two tickets to an upcoming concert for $100 apiece when the concert wasfirst announced three months ago. Recently, you saw that StubHub was listing similar seats for $225apiece. What does it cost you to attend the concert?Question 4:Due to the housing bubble, many houses are now selling for much less than their selling price just two tothree years ago. There is evidence that homeowners with virtually identical houses tend to ask for moreif they paid more for the house. What fallacy are they making?Question 5:Students doing poorly in courses often consider dropping the courses. Many universities will only offer arefund up to a certain date. Should this affect their drop decisions?

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