Economic Foundations & Market Decisions — Chapter quiz · Government, Civic Participation & Economics, Grade 12

5 focused units, followed by an evidence workshop, chapter review, and chapter quiz.

Problem 1

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 2

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 3

Why is the supplied demand increase a shift rather than a movement along the old curve?
Answer and explanation

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.

Problem 4

Does a product’s own price increase automatically shift its demand curve?
Answer and explanation

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.

Problem 5

What does a positive incremental difference establish in the supplied order?
Answer and explanation

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.

Problem 6

Does a firm’s large revenue establish high profit?
Answer and explanation

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.

Problem 7

Why can a favorable expected profit coexist with substantial risk?
Answer and explanation

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.

Problem 8

Does possessing more equipment guarantee more production?
Answer and explanation

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.

Problem 9

Why must an incentive model be compared with actual institutions?
Answer and explanation

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.

Problem 10

Is every government-provided service nonrival and nonexcludable?
Answer and explanation

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.

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