12th grade Scarcity, choices and opportunity cost worksheet

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.

   Ari reads cards A and B. Which comparison should the council use to decide whether to finish?

   • Stop: the total cost of $60 million is above the $28 million benefit, so finishing loses $32 million
   • Finish: spending $20 million more recovers part of the $40 million already spent on the bridge
   • Stop: $40 million is already spent, which is more than the $28 million of benefit, so the project is a loss
   • Finish: $28 million of benefit less $20 million to come is +$8 million, against a $5 million sale
3. 2.

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

   • 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
   • Wrong: the $40 million matters only if the county has other projects waiting for that money
   • Right: stopping now would lose the $40 million, so money already spent is a reason to finish
4. 3.

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

   • It could flip: finishing wins above $25 million of benefit, and the range runs from $15 million to $30 million
   • 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

5. 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.

6. 4.

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

   • 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
   • 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
   • Nothing changes, since the $40 million already spent still decides the choice

7. 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.

8. 5.

   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
   • 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
   • Bus: it costs $6 against $14, which is $8 less each day, and the table shows no other cost
9. 6.

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

   • $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
   • $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
10. 7.

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

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

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?

    • Both would rather wait in line than pay $120: the wait costs Marcus about $45 and Dani about $9
    • 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
    • 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 lottery gives each applicant the same chance, 100 in 160
    • A line gives permits to the students who give up the most time