Question

1.a. "Principle #1: People Face Tradeoffs"

Give 2 examples of important trade-offs that you face in your life.

1.b. "Principle #4: People Respond to Incentives"

Give 2 examples of incentives that can be done by the policymaker to affect people economical attitude.

1.c. Principle #2: The Cost of Something Is What You Give Up to Get It. You are given 1000 KD by a relative. You have the choice between investing the money now in a project or saving it away for a year in a bank account that pays 6% interest

Define opportunity cost and mention what is the opportunity cost of spending the 1000 KD now?