Economic Foundations & Market Decisions — Chapter Practice, Grade 12

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.

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.

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.

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.

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.

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.

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.

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.

Quantity demanded is 60 units and supplied is 20, so demand exceeds supply by 40 units per week at that price. It does not mean 40 additional units already exist or establish how an actual market would allocate the available 20.

Equilibrium equates market quantities under defined conditions. Demand includes purchasing capacity, so needs without that capacity may not appear as purchases. Distribution, access, and other effects require additional evidence and criteria.

Quantities change at every given price while the supply schedule is unchanged. A movement along the original demand curve would follow a change in the product’s own price under its held-constant conditions.

Investigate allocation, enforcement, contracts, later supply responses, quality, and other provision. The numerical gap describes plans at a price under assumptions; it does not establish every real consequence or one automatic policy judgment.

Originally, $3 and 40 units equate supply and demand. After the shift, demand at $3 is 80 while supply remains 40, a shortage of 40. At $4, both are 60, so the new listed equilibrium is $4 and 60 units. The prediction holds within this supplied model; it does not establish the cause of an actual market change or instant adjustment.

Find equality in the original schedule.

Add 40 to demand rows.

Compare quantities at $3 and $4.

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.

No. Under unchanged other conditions, it produces movement along the demand relationship. A shift requires a change in another relevant condition, such as preferences or income under a specified assumption.

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.

The model surplus is 40 units per week at that price. Actual inventory, contracts, allocation, and adjustment are not supplied. The gap describes planned quantities under assumptions, not every physical outcome or welfare consequence.

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.

It can shift supply because another relevant production condition changed. A movement along the original curve concerns the product’s own price with other conditions held constant. Specify the input effect and assumptions rather than changing both concepts indiscriminately.

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.

Economic analysis includes relevant opportunity costs that may not appear as accounting expenses. In the invented case, subtracting the additional $60 opportunity cost from $80 accounting profit leaves $20. Definitions must avoid double counting.

Alternatives differ in substitution, access, switching costs, and entry conditions. Several sellers can coexist with substantial market power. Define the relevant market and examine behavior and constraints, not only names.

The extra order adds $20 under the stated revenue, cost, and no-displacement assumptions. It does not establish total profit, cash timing, or every external effect. Those require the firm’s broader records and relevant costs.

It identifies features such as concentration or entry conditions. A legal finding also requires the relevant rule, conduct, evidence, and procedure. Do not infer a complete violation or justification solely from size or a category name.

Revenue is $500; accounting profit is $80; economic profit under the supplied definitions is $20. The calculation includes the $60 forgone income once. It does not establish cash-flow timing, future demand, or all social effects. If an opportunity cost were already in the cost measure, subtracting it again would be an error.

Multiply price by quantity.

Subtract stated accounting costs.

Subtract the additional opportunity cost once.

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.

No. Profit depends on relevant costs and their definitions. Revenue measures sales receipts in a period. Examine expenses, opportunity costs, and timing before evaluating profitability or financial resilience.

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.

Revenue is $400, accounting profit $50, and economic profit −$20 under the supplied definitions. The opportunity cost is subtracted once. Positive accounting profit therefore need not mean a positive economic result; cash timing and other effects remain outside the calculation.

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.

It establishes a positive incremental difference under the stated assumptions. It does not reveal total profitability, payment timing, market power, or external effects. Those require the broader record and relevant costs.

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.

Money or credit finances a transaction, while equipment directly supplies productive services. Distinguishing financial resources from produced tools explains the pathway from funding to capacity and prevents counting the same activity as two identical inputs.

Productivity concerns output per labor input. Compensation depends on other institutions and conditions as well. Use wage records and distributional evidence rather than transferring the productivity percentage automatically to every worker’s pay.

An expectation summarizes scenarios rather than guaranteeing one outcome. Sales, costs, timing, and obligations can vary. A plan should compare downside cases and cash needs as well as the average estimate.

Different sectors and institutions can use different ownership, coordination, and allocation mechanisms. A label omits those relationships. Compare the specific rules, incentives, information, and results needed for the question.

Productivity rises from four to five loaves per hour. The increase is one divided by four, or 25 percent. This establishes a rate change under consistent measures, not an equal wage increase or the isolated effect of one technology. Compensation, output quality, inputs, and implementation records would help explain the change and its distribution.

Divide output by labor hours.

Calculate the change relative to the original rate.

Distinguish productivity from compensation and causation.

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.

No. Labor, materials, maintenance, demand, coordination, and other constraints may limit use. Explain how the equipment changes the production process under stated conditions rather than treating capital quantity as an automatic outcome.

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.

Productivity rises from four to five output units per hour, a twenty-five percent increase. The measure does not establish identical pay growth or one isolated cause. Output quality and other inputs should also be checked for a causal comparison.

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.

Funds can enable acquisition, while the tool and complementary labor, training, materials, maintenance, and demand determine use. Financing, equipment, effective capacity, and actual output are different stages of evidence.

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.

An effect on people outside the exchange may not enter the buyer’s or seller’s decision. Under the supplied model, the $4 external harm raises social cost beyond the $10 private cost. Identify and measure the effect rather than assuming every price includes it.

Funding describes who pays. The economic category concerns rivalry and exclusion. A publicly funded service can have scarce places or exclude users; evaluate its use characteristics separately from its financing.

Rules, cooperation, information, and enforcement can change behavior. The model identifies a possible pathway, while evidence establishes whether it operates and how strongly in the particular setting.

A response still needs reliable measurement, authority, administration, incentives, and comparison with alternatives. Explain its mechanism and limits, including who bears costs. The original problem does not guarantee every proposed remedy works.

Modeled social cost is $14 per unit. A $4 charge could make the measured external effect enter the producer’s decision under the assumptions. The packet lacks demand, damage variation, enforcement, and distributional evidence, so it cannot establish optimal output or universal effectiveness. It illustrates a mechanism rather than resolving a real policy dispute.

Add distinct costs.

Identify the incentive mechanism.

State missing information for broader conclusions.

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.

No. Some have limited places, congestion, or eligibility restrictions. Public provision and the technical public-good category answer different questions. Classify the use and exclusion conditions rather than the payer alone.

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.

Social cost is $11 per unit if the measures are distinct and additive. Demand, harm variation, distribution, authority, and enforcement are not supplied, so the total does not establish optimal output or the best instrument.

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.

A place used by one student can reduce the places available to others at capacity. Rivalry concerns use, while public funding concerns payment. Define exclusion and conditions separately before assigning the technical category.

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.