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
   • Right: the $40 million should count, but only up to the $5 million that the unfinished work can recover
   • The $40 million is gone either way, so it cannot favor finishing; only costs and gains still to come count
   • 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?

   • Finishing wins for sure, since the single guess, $28 million, is above the $25 million break-even
   • 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
   • 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?

   • Stopping and building the bus lane wins: $5 million of sale plus a $6 million gain beats the $8 million net
   • Nothing changes, since the $40 million already spent still decides the choice
   • Stopping wins, since the bus lane's $26 million is $6 million above its $20 million cost
   • 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

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: 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
   • Either one: at $20 an hour the two options cost about the same each day
   • Drive: the 50 minutes saved are worth about $16.67 to her, above the extra $8 it costs
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
   • 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
   • $12 an hour, the extra $8 spread over the 40 minutes of driving
9. 6.

   Maya's friend Tomas values an hour at $9. Milo compares Tomas with Maya. Which statement is best supported?

   • Tomas is indifferent, since $9 is close enough to $9.60 that the two cost the same to him each day
   • The bus costs him $6 against $14, so it is cheaper whatever his time is worth
   • Tomas should drive too, since the table gives one right answer for each rider who makes this trip
   • At $9 an hour the bus costs about $19.50 a day and driving about $20, so Tomas slightly prefers the bus
10. 7.

    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

11. 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.

12. 8.

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

    • 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
    • The lottery, since entering costs the applicant's time and the winners are not known
    • The price, since a $120 fee costs a worker earning $15 an hour eight hours of pay
13. 9.

    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 wait in line than pay $120: the wait costs Marcus about $45 and Dani about $9
    • Both would rather enter the lottery, since a free draw costs neither of them any money or time
    • Dani would rather pay, since her time is cheap and a $120 fee is worth paying
14. 10.

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

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