Scarcity, Opportunity Cost & Decisions at the Margin — Practice · Grade 12 Social Studies

Chapter: Economic Foundations & Market Decisions

What this practice covers

By the end of Scarcity, Opportunity Cost & Decisions at the Margin you should be able to:

8 questions, written answer, each with a worked explanation.

Vocabulary used: scarcity, opportunity cost, sunk cost, marginal, production frontier.

Problem 1

Why does scarcity remain relevant when no purchase price is charged?
Answer and explanation

Limited time, materials, capacity, or other resources still have competing uses. A zero money price does not remove the alternative forgone or establish unlimited availability. Identify the scarce resource and feasible alternatives.

Problem 2

What is the opportunity cost of one booklet in the supplied model?
Answer and explanation

One booklet uses half an hour, during which four posters per hour would yield two posters. The cost is two posters per booklet under the stated constant rates. It is forgone feasible production, not an additional cash payment.

Problem 3

Why does irrecoverable prior spending not automatically justify continuing?
Answer and explanation

It is the same past cost under the remaining alternatives. The current decision turns on additional benefits, costs, and feasible options. Continuing solely to justify the sunk amount can add a further loss rather than recover it.

Problem 4

Why does a frontier point not automatically identify the socially preferred allocation?
Answer and explanation

It describes feasibility and represented resource use, not who benefits or which combination people value. A choice on the boundary can be efficient in the model while differing in fairness or desirability. State the evaluative criterion separately.

Problem 5

Invented model: eight hours; two booklets or four posters per hour; constant productivity. A plan promises 12 booklets and 16 posters in those eight hours. Test feasibility and calculate the booklet opportunity cost.
Answer and explanation

Twelve booklets require six hours and 16 posters require four, totaling ten hours. The plan is infeasible within eight hours under the stated rates. One booklet’s half-hour could produce two posters, so its opportunity cost is two posters. A revised allocation or an explicit capacity change is needed; a desire for both outputs does not remove the constraint.

Compute hours required for each product.

Add required time.

Label forgone output per booklet.

Response criteria

  • Explain the relevant institution or economic concept accurately; show correct calculations where needed.
  • Connect supplied evidence and stated assumptions to an explained conclusion.
  • Compare feasible options and their effects on different people without stereotypes.
  • Identify a limitation, tradeoff, uncertainty, or condition that qualifies the conclusion.

Problem 6

Does using all available resources guarantee a fair allocation?
Answer and explanation

No. Production efficiency concerns resource use under a model, while fairness concerns distribution and evaluative criteria. Explain each separately and identify whose benefits and burdens are represented.

Response criteria

  • Explain the relevant institution or economic concept accurately; show correct calculations where needed.
  • Connect supplied evidence and stated assumptions to an explained conclusion.
  • Compare feasible options and their effects on different people without stereotypes.
  • Identify a limitation, tradeoff, uncertainty, or condition that qualifies the conclusion.

Problem 7

Invented production: one hour yields three cards or six labels. Calculate the opportunity cost of a card and hours for nine cards plus 12 labels.
Answer and explanation

One card costs two labels of forgone output. Nine cards require three hours and 12 labels two, totaling five hours under constant rates. Feasibility depends on the supplied available time; the rates alone do not provide it.

Response criteria

  • Explain the relevant institution or economic concept accurately; show correct calculations where needed.
  • Connect supplied evidence and stated assumptions to an explained conclusion.
  • Compare feasible options and their effects on different people without stereotypes.
  • Identify a limitation, tradeoff, uncertainty, or condition that qualifies the conclusion.

Problem 8

An irrecoverable $80 payment is past; continuing costs $30 and adds $20 of benefit relative to the best alternative. Evaluate the marginal comparison.
Answer and explanation

Continuing has $10 more additional cost than benefit under the stated comparison. The sunk $80 does not differ between remaining choices and cannot be recovered by counting it as a reason to add another loss. Other future effects are excluded.

Response criteria

  • Explain the relevant institution or economic concept accurately; show correct calculations where needed.
  • Connect supplied evidence and stated assumptions to an explained conclusion.
  • Compare feasible options and their effects on different people without stereotypes.
  • Identify a limitation, tradeoff, uncertainty, or condition that qualifies the conclusion.

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