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1- Like a good economist, you calculated the opportunity cost of getting your college degree. Suppose that at your university, you will pay $10000 each year for tuition, $2000 each year for textbooks, and $12000 per year for room and board. Before you left for college, your boss at your high-school job offered you a job paying $20000 per year. Assume that if you decided not to go to college, your parents would not let you live at home. What is your opportunity cost for four years of college? $ _______
2- Suppose on Friday night you have a choice to go either to a Katy Perry concert or a Lady Gaga concert. You won a free ticket to see Katy Perry. You would pay as much as $300 to see Lady Gaga perform, but tickets to her show cost $100 . Assume that you end up going to the Katy Perry concert. Since you went to the Katy Perry concert, you must be willing to pay at least $ ______to see Katy Perry.
3- In Chapter 1, you learned that buying and selling textbooks are two separate decisions made at the margin. Textbooks create value both when they are bought and when they are sold. Think about your decision to buy the textbook for this course. You paid $200 for the book, but you would have been willing to pay $500 to use the book for the semester. Suppose that at the end of the semester you could keep your textbook or sell it back to the bookstore. Once you have completed the course, the book is worth only $70 to you. The bookstore will pay you 50% of the original $200. How much total value have you gained? $________
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