Scarcity, choices and opportunity cost

Grade 12 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   Use this

   Card A, "The Marsh Road Bridge" (made up). A county has spent $40 million on a bridge. Finishing needs $20 million more. If finished, engineers estimate $28 million of benefits to drivers. If the work stops, the unfinished part can be sold for $5 million. Card B, "A council member" (made up). "We have already put $40 million in. If we stop now, that money is wasted." Card C, "The estimate" (made up). The engineers' best single guess of the benefit is $28 million. They say it could be anywhere from $15 million to $30 million.

2. 1.

   Bo tests the council member's claim on card B. Which is the strongest reply?

   • Wrong: the $40 million matters only if the county has other projects waiting for that money
   • The $40 million is gone either way, so it cannot favor finishing; only costs and gains still to come count
   • Right: the $40 million should count, but only up to the $5 million that the unfinished work can recover
   • Right: stopping now would lose the $40 million, so money already spent is a reason to finish
3. 2.

   Esme reads card C. What does the range of $15 million to $30 million show about the decision?

   • Stopping wins, since the lowest estimate, $15 million, is below the $20 million of cost to come
   • Finishing wins at any benefit above $20 million, the cost to come, so just the lowest guess, $15 million, is a real worry
   • Finishing wins for sure, since the single guess, $28 million, is above the $25 million break-even
   • It could flip: finishing wins above $25 million of benefit, and the range runs from $15 million to $30 million

4. Use this

   Card A, "The Marsh Road Bridge" (made up). A county has spent $40 million on a bridge. Finishing needs $20 million more and would give $28 million of benefits. If the work stops, the unfinished part can be sold for $5 million. Card D, "Another project" (made up). The same $20 million could instead pay for a new bus lane that would give $26 million of benefits.

5. 3.

   Jun adds card D to card A. Which statement about the best choice is supported?

   • Nothing changes, since the $40 million already spent still decides the choice
   • Finishing still wins, because $28 million of benefit is more than the bus lane's $26 million, so a bridge nearly built should be kept
   • Stopping wins, since the bus lane's $26 million is $6 million above its $20 million cost
   • Stopping and building the bus lane wins: $5 million of sale plus a $6 million gain beats the $8 million net

6. Use this

   Maya's trip to work (example figures, made up for practice). Columns: Option, Time, round trip, Money cost per day. Bus, 90 minutes, $6; Drive, 40 minutes, $14. Economists often count the time a trip takes as a cost, valued at what a person could earn or would pay to save it. People value their time differently.

7. 4.

   Maya values an hour of her time at $20. Kira compares the options. Which choice fits the table?

   • Drive: the 50 minutes saved are worth about $16.67 to her, above the extra $8 it costs
   • Either one: at $20 an hour the two options cost about the same each day
   • Drive: both options take the same time once she counts her $20 an hour of waiting time
   • Bus: it costs $6 against $14, which is $8 less each day, and the table shows no other cost
8. 5.

   Luz asks at what hourly value of time the bus and driving cost the same each day. Which answer fits?

   • $16 an hour, the extra $8 spread over half an hour of time saved
   • $12 an hour, the extra $8 spread over the 40 minutes of driving
   • About $9.60 an hour: below that the bus costs less overall, above it driving does
   • $8 an hour, the extra money that driving costs each day, since the options differ by $8
9. 6.

   Noah looks for the missing fact that would most change the $9.60 break-even value. Which fact is it?

   • Whether Maya can study or work on the bus, so the 90 minutes cost less than a full 90 minutes
   • Whether Maya's wage is paid weekly or monthly, because that changes what her hour is worth to her each day
   • Whether the bus fare is paid in cash or by card, because that changes the money cost
   • How many riders share the bus on Maya's route, because crowding is a cost

10. Use this

    Card A, "Student parking permits" (made up). The school lot has 100 permits. 160 students want one. Three ways to hand them out: Price, $120 a permit; Lottery, free to enter, 100 names drawn at random; Line, free, the first 100 in line get one, and the line forms 3 hours before the office opens. Card B, "Rationing" (in our words). Rationing is deciding who gets a scarce good. A price gives it to those who are willing and able to pay. A lottery gives each applicant the same chance. A line gives it to those who give up the most time. Card C, "Two students" (made up). Marcus earns $15 an hour at a job. Dani has no job and values an hour of her time at about $3.

11. 7.

    Pia asks which method puts the biggest cost on students who give up wages by waiting. Which fits cards A to C?

    • The price, since a $120 fee costs a worker earning $15 an hour eight hours of pay
    • The lottery, since entering costs the applicant's time and the winners are not known
    • No method, since a free permit has no cost to anyone who gets one
    • The line, since 3 hours of waiting costs Marcus about $45 in earnings
12. 8.

    Ren compares Marcus and Dani on the price and the line. Which statement is best supported?

    • Marcus would rather pay, since waiting three hours costs him more than any fee could
    • Both would rather enter the lottery, since a free draw costs neither of them any money or time
    • Both would rather wait in line than pay $120: the wait costs Marcus about $45 and Dani about $9
    • Dani would rather pay, since her time is cheap and a $120 fee is worth paying
13. 9.

    A student says the lottery costs nothing because nobody pays. Tala tests the claim. What is the best reply?

    • Right: a lottery is fair, and a fair method has no opportunity cost
    • Right: with no fee and no wait, a lottery puts no cost on anyone
    • It still has costs: applicants spend time entering, and 60 of 160 get no permit, whoever valued it most
    • Wrong: a lottery raises the cost of a permit to $120, the same as under the price method, for each winner
14. 10.

    Zee must pick the claim that cards A to C cannot support. Which one is it?

    • A line gives permits to the students who give up the most time
    • A price gives the permits to the students who want them most
    • A lottery gives each applicant the same chance, 100 in 160
    • A price gives permits to students who are willing and able to pay