Think at the margin: one more unit, its extra cost and extra benefit

Grade 12 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   Use this

   Cards A to C on selling empty seats (all made up for practice). Card A, "One flight's costs (made up)". Written for this sheet. Summary in our words, not a quotation: a flight costs an airline $12,000 whether it flies full or half empty. Each extra passenger adds $20 of cost for food and handling. The plane has 100 seats. 70 passengers have booked, paying $250 each on average. Card B, "The last-minute offer (made up)". Written for this sheet. Summary in our words, not a quotation: the airline could sell the 30 empty seats at $60 each in the last hour before the flight. Only 20 of those seats would sell at that price. Card C, "The airline's worry (made up)". Written for this sheet. Summary in our words, not a quotation: a manager worries that some of the 70 booked passengers would wait and buy a $60 seat instead of their $250 fare.

2. 1.

   Jun uses cards A and B. Ignoring card C, should the airline sell the 20 seats at $60?

   • Yes: each seat adds $60 of revenue and $20 of cost, so 20 seats add $800 even below the average cost
   • No: $60 is far below the $250 average fare and below the cost of $12,000 divided among the passengers
   • No: the flight's $12,000 must be covered first, and 20 seats at $60 give $1,200
   • Yes: any fare above zero is worth taking, since the plane flies with empty seats anyway
3. 2.

   Esme reads the manager's worry on card C. Which is the strongest objection to the $60 offer?

   • The airline has already spent $12,000 on the flight, so it must not sell seats below the average cost
   • Each passenger who switches from $250 to $60 costs $190, so a few switchers erase the $800 gain
   • Selling seats at $60 would make the airline look cheap, which would hurt its name
   • The average fare is $250, so a $60 fare brings the average down and the offer is unprofitable
4. 3.

   Ren wants evidence to settle the manager's worry. Which is most useful?

   • The average fare paid by the 70 booked passengers, since $250 is just an average and may mislead
   • How much the airline paid for the plane, since the cost of the plane sets the least it must charge
   • How many of the 70 booked passengers would switch, since over 4 would erase the $800 gain
   • Whether 20 seats would sell at $60, which card B already says they would

5. Use this

   Cards A to C on trade and changing costs (all made up for practice). Card A, "Phones and coats (made up)". Written for this sheet. Table, columns | Phones | Coats, per worker-day, each worker-day makes one or the other: Country P | 6 | 12; Country Q | 2 | 8. Card B, "Q's improvement (made up)". Written for this sheet. Summary in our words, not a quotation: Q learns a new method that raises its output to 6 phones per worker-day. Its coat output stays at 8. P's outputs do not change. Card C, "Speaker W (made up)". Written for this sheet. Summary in our words, not a quotation: W says a country should make what it makes best. P makes more of everything than Q did, so P should not buy goods from Q.

6. 4.

   Pia uses card A. Which statement about trade between P and Q is best supported?

   • P should make phones and Q coats; 3 coats for a phone gains both, as it lies between 2 and 4 coats
   • Q should make phones and P coats, since a phone costs Q 4 coats, which is more than P's 2
   • P should make both goods, since it makes more of each than Q and so has the advantage in both
   • A trade of 1 phone for 5 coats gains both, since P receives more coats than the 4 that a phone costs Q
7. 5.

   Zee applies card B to card A. How does Q's improvement change who should make phones?

   • The advantage flips: a phone now costs Q about 1.33 coats and P 2, so Q should make phones
   • It flips the other way: Q's faster phones make it worse off, so P should buy fewer phones
   • It does not change: P still makes more of both goods, so P keeps the advantage in phones
   • It gives Q the advantage in both goods, since its phone output rose and its coats did not
8. 6.

   Luz tests speaker W's claim on card C against cards A and B. What is the best verdict?

   • Strong: Q's output rose, so Q will sell to P at prices P cannot afford
   • Strong: P makes more of both goods, so buying anything from Q wastes P's workers' days
   • Weak: P gains by making coats and buying phones from Q, where a phone costs 1.33 coats, not 2
   • Weak: P's workers will move to Q, so the claim is about where workers live

9. Use this

   Cards A to C on a bridge toll (all made up for practice). Card A, "Toll and traffic (made up)". Written for this sheet. Table, columns Toll | Cars an hour crossing: $0 | 1,000; $2 | 900; $4 | 780; $6 | 700. Card B, "The town's aims (made up)". Written for this sheet. Summary in our words, not a quotation: the town wants fewer cars on the bridge in the rush hour and also wants toll money for repairs. Card C, "Two views (made up)". Written for this sheet. Summary in our words, not a quotation: Speaker K says raising the toll from $4 to $6 will cut traffic sharply. Speaker L says drivers hardly react to the toll, so a higher toll just raises money.

10. 7.

    Noah uses card A to find the price elasticity of demand between the $2 and $4 tolls (midpoint method). What does it say?

    • About 4.7: cars fell 14 percent and the toll rose 67 percent, so demand is elastic
    • About 0.2: cars fell about 14 percent while the toll rose about 67 percent, so drivers react little
    • About 0.13: cars fell about 13 percent (120 of 900) while the toll doubled, a 100 percent rise
    • About 60: cars fell 120 for a $2 rise, so each dollar of toll removes 60 cars and demand is very responsive
11. 8.

    Tala weighs speakers K and L on card C against card A. Which statement fits the evidence best?

    • K is right: raising the toll from $4 to $6 cuts traffic sharply, since higher prices cut traffic
    • Both are wrong, since toll money would fall as cars fall from 780 to 700
    • L is nearer: the rise to $6 cut cars by 80 (10 percent) and raised toll money from $3,120 to $4,200
    • L is right in full: a higher toll just raises money and does nothing for traffic

12. Use this

    Cards A to C on a stadium project (all made up for practice). Card A, "The project (made up)". Written for this sheet. Summary in our words, not a quotation: a town has spent $30 million on a stadium that is not finished. Finishing costs another $20 million. If it is finished, the town expects it to be worth $26 million to the town. If the town stops now, it can sell the site and materials for $4 million. Card B, "A risk (made up)". Written for this sheet. Summary in our words, not a quotation: an engineer says there is a 25 percent chance the finished stadium will be worth only $12 million to the town, and a 75 percent chance it will be worth $26 million. Card C, "A council member (made up)". Written for this sheet. Summary in our words, not a quotation: the member says the town has already spent $30 million, so it must finish the stadium.

13. 9.

    Kira uses card A and ignores card B. Should the town finish the stadium?

    • No: the town has spent $30 million and finishing adds $20 million more, a total of $50 million, above $26 million
    • Yes: finishing nets $6 million ($26 million less $20 million) against $4 million from stopping
    • Yes: the stadium is worth $26 million, more than the $20 million it costs to finish, so finish
    • No: finishing costs $20 million for a stadium worth $26 million, and the $4 million sale is a better price
14. 10.

    Milo adds card B to the decision. What does the risk do to the answer?

    • It does not matter, since the risk is a share of the whole project and the project is mostly built
    • It does not change it: the stadium is still worth $26 million most of the time, so the town should finish
    • It flips it: expected value is $22.5 million, so finishing nets $2.5 million, under the $4 million
    • It strengthens the case for finishing, since the $30 million already spent gives the town a stake