Your state legislature is debating how to spend a surprise budget surplus of $500 million. Three proposals have emerged as the top contenders: Invest in expanding the state university system - Build new facilities and hire more faculty to accommodate 10,000 additional students over the next five years Repair and upgrade deteriorating infrastructure - Fix crumbling bridges, repave highways, and update water systems throughout the state Provide a one-time tax rebate - Return the money directly to taxpayers, giving each household approximately $400 The governor favors the tax rebate, arguing at a press conference: "This is the taxpayers' money, not the government's money. Giving it back costs us nothing—we're just returning what belongs to them in the first place." A) Analyze the governor's claim that returning the money "costs us nothing." What is the actual opportunity cost of the tax rebate? How should we think about the cost of choosing one option when the money came from an unexpected surplus rather than from current tax collection? B) A key legislator argues: "We shouldn't think of this as three separate choices. The real question is whether we want to invest in our future or not. Both education and infrastructure are investments that will pay dividends for decades, while the rebate is just short-term consumption. So really, the opportunity cost of the rebate is our state's entire future prosperity." Evaluate this argument. Is the legislator correctly applying the concept of opportunity cost, or are they conflating it with something else? What are the strengths and limitations of framing the decision this way? C) Different groups of citizens face very different opportunity costs regarding this decision: A struggling single parent working two jobs to make ends meet A recent college graduate with substantial student loan debt who can't find a job in their field A small business owner whose delivery trucks are constantly damaged by potholes A retired couple living comfortably on their savings and pensions What is each group likely giving up (their opportunity cost) depending on which option is chosen. What does this tell us about the challenge of making public policy decisions? Can economic analysis alone determine the "right" choice, or are there other considerations?