1) You decide to go to college. You will live with your parents, but pay for all other expenses associated with going to school. If you chose not to go to school then you would have worked at a job paying minimum wage and lived with your parents until you could save for you own place. According to the Cost Benefit Principle, what should be considered a cost of your decision to go to college?

a) The money you spend on books and tuition.

b) The amount of money you would have spent on rent if you lived on your own.

c) The lower wages you would get if you don't finish college.

d) All of the above would be costs according to the Cost Benefit Principle.

Question 34

In our class, we used the Opportunity Cost Principle to understand the true cost of things. Also, in markets, we learned that supply and demand forces determine how much goods and services are produced. Suppose a government imposes a tax on some good, and as a result, the market prices increase and the market quantity decreases. According to the Opportunity Cost Principle, what is best way to understand what the policy costs society?

A) The value of the lost reduced output as a result of fewer market transactions.

B)A The value of the tax revenue generated from the tax.

C) The value of the lost profits for the firms only.

Question 35

Suppose two firms compete with each other in the same industry. One firm decides to try to raise its profits by lowering prices to attract more customers. According to the Interdependence Principle, why might this action result in no increased sales?

A) The firm's suppliers may respond to increased market share by increasing input prices.

B) The profits of one firm are determined, in part, by what the other frim does

C) The profits of one firm may change over time due to outside firms entering the industry.

D) All of the above are implied by the Interdependence Princple