Answers:
Your ability to pay.
KIDDING!
They want to know if their investment of time and effort in you will pay off in the long-run (your tuition, room and board and supplies don't cover all their expenses, so just like any other business, they want a return on their investment!).
Specifically, they look at your grades but, depending on the college, they may actually rely more on your application essays, teacher's recommendations and personal interview. They know test scores don't give a true appraisal of ability or potential.
Depends on the college. My college put a huge emphasis on the essays for the application. Many colleges have a recommended ACT score. If you don't have at least an 18 re-take it if possible. Income is a factor. They want to know if you will be able to afford going there or they won't bother sometimes. GPA is obviously important, but again it depends on the school. Ethnicity plays a factor actually, because most colleges want to have a diverse atmospere. Extra-curricular activities are good fillers. 1 or 2 is usually enough i think.
GPA
Different colleges have different criteria. Generally, the most important things, in order, are weighted rank-in-class (much more important than actual GPA except at some large public universities with formula admissions policies), difficulty of your course schedule, standardized test scores, and extracurricular activities. Various personal characteristics, including whether you're in state, whether you're from an underrepresented minority group, whether you're a first generation college student, and whether you're a legacy case range from completely unimportant to very important depending on the school.
For extracurricular activities, they are looking for evidence that you don't need to spend every waking moment studying, that you have some interpersonal and leadership skills, and that you have some passion that will take you places. They are not looking for people with huge lists of clubs with superficial involvement. Also, extracurricular activities are nowhere near as important as academics. The most selective schools take some students who have the potential to be brilliant scholars, but have limited extracurricular activities. They do not take students who are great in extracurriculars, put are poor students. The only exception is for recruited athletes.
Most schools have need-blind admissions policies and promise to meet 100% of demonstrated financial need, so you need not worry about your family income affecting your chances one way or the other, unless your parents are huge donors.
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