D2.Eco.2.9-12: Arguing for or Against a Solution with Marginal Benefits and Marginal Costs
In plain English: D2.Eco.2.9-12 is the C3 Framework economics indicator for grades 9-12 that asks students to use marginal benefits and marginal costs to construct an argument for or against an approach or solution to an economic issue. Students compare the gain and the cost of one more unit, find where doing more stops paying off, and turn that reasoning into a written argument.
Use marginal benefits and marginal costs to construct an argument for or against an approach or solution to an economic issue.
C3 Framework for Social Studies (NCSS) · Dimension 2: Applying Disciplinary Concepts and Tools · Discipline: Economics · Economic Decision Making · Official standard
D2.Eco.2.9-12 asks students to construct an argument, for or against a solution to an economic issue, built on marginal benefits (the extra gain from one more unit of something) and marginal costs (the extra cost of that unit). The key idea is that a good decision about "how much" compares the next step's gain with the next step's cost, not the totals: keep adding while marginal benefit is at least marginal cost, and stop when it falls below (Diagram 2).
Students read the federal government's own guidance on comparing "incremental" (marginal) benefits and costs, OMB Circular A-4 (Source 1), then apply it to an invented city bus route (Source 2) and critique two invented council arguments (Source 3). The activities ask students to find the best level of an activity, write and rebut arguments, and spot common reasoning errors such as sunk costs and averages.
Learning Objectives
By the end of this lesson, students will be able to:
Calculate marginal benefit and marginal cost from a table of total benefits and total costs
Use the rule "do more while marginal benefit is at least marginal cost" to find the level with the greatest net benefit
Explain why totals, averages, benefit-cost ratios and sunk costs can mislead a "how much" decision
Construct a written argument for or against a proposal using marginal benefits and marginal costs as evidence
Acknowledge counterclaims, including benefits and costs that are hard to measure in dollars or that fall on particular groups
Prior Knowledge Required
Students should already be comfortable with:
Analyzing how incentives influence choices and policies D2.Eco.1.9-12
Writing arguments with claims, evidence and counterclaims WHST.11-12.1
Subtracting and comparing values in a table; reading a bar graph
"An all-you-can-eat pizza place charges $12. You have eaten four slices. Should the price you paid decide whether you eat a fifth slice? What should decide it?"
Take answers. Students usually say the fifth slice should depend on how much they want it and how they will feel, not on the $12, which is already spent. Name the ideas: the gain from one more slice is its marginal benefit; what one more slice costs you (here, discomfort) is its marginal cost; money already spent that cannot be recovered is a sunk cost. D2.Eco.2.9-12 asks students to use marginal benefits and marginal costs to argue for or against a solution to an economic issue.
Direct Instruction20 minutes
Key terms for D2.Eco.2.9-12 (working definitions)
Term
Meaning
How to find it
Marginal benefit (MB)
The extra benefit from one more unit, or from the next step up
Total benefit at the new level minus total benefit at the old level
Marginal cost (MC)
The extra cost of one more unit, or of the next step up
Total cost at the new level minus total cost at the old level
Net benefit
Total benefit minus total cost
Largest where the last step taken had MB at least MC
Sunk cost
A cost already paid that no choice can recover
Leave it out of a decision about what to do next
Incremental
The word Circular A-4 uses for marginal: the change from one option to the next
Compare each option with the next less strict one
Part 1: The marginal rule. Show Diagram 2. Marginal benefit usually falls as an activity grows, because the first units meet the most urgent needs, and marginal cost often rises, because extra capacity is harder to find. While MB is above MC, doing more adds to net benefit; once MC is above MB, doing more subtracts from it. The best amount is where they meet.
Part 2: From numbers to an argument. A marginal argument has four parts: a claim (for or against a proposal), evidence (the MB and MC of the step in question), reasoning (why comparing those margins answers the question) and a counterclaim with a response (benefits or costs left out, uncertain estimates, or groups who bear the costs). Work these examples, all invented.
A business decision: closing time (invented)
A bike-repair shop now closes at 7 p.m. Staying open an extra hour would add revenue of about $120 for 7-8 p.m., $75 for 8-9 p.m. and $40 for 9-10 p.m. Each extra hour costs $60 for a mechanic's pay and the lights. Until what time should it stay open, and how much does that add each day?
Result: Compare each hour: 7-8 p.m., MB $120 > MC $60, open. 8-9 p.m., MB $75 > MC $60, open. 9-10 p.m., MB $40 < MC $60, close. Stay open until 9 p.m. Added net benefit: ($120 - $60) + ($75 - $60) = $75 a day. Argument: for staying open to 9, against staying open to 10.
Choosing how strict a rule should be (invented; Diagram 1)
A water utility can treat its water to four levels. Total yearly benefits (health and fewer repairs) are $10 million, $16 million, $19 million and $20 million for Options 1-4; total yearly costs are $2 million, $5 million, $10 million and $18 million. Which option has the greatest net benefit, and what do the margins show?
Result: Net benefits: $8M, $11M, $9M and $2M, so Option 2 is best. Margins: going from 1 to 2 adds MB $6M against MC $3M (worth it); from 2 to 3 adds MB $3M against MC $5M (not worth it). Benefit-cost ratios point the wrong way: Option 1's ratio is 10 / 2 = 5, higher than Option 2's 16 / 5 = 3.2, even though Option 2 gives $3 million more net benefit.
An argument against a proposal, with a counterclaim (invented)
A county bookmobile (a library on a truck) has two weekly stops. A third stop at a rural school would draw about 30 visits a week, which the library values at $5 a visit. The stop would cost $220 a week for the driver's time and fuel. Build the argument.
Result: MB = 30 x $5 = $150 a week; MC = $220 a week. Claim: against adding the stop as planned, because it would cost $70 a week more than it adds. Counterclaim: the $5 value may leave out benefits that are hard to price, such as reading skills for students far from any library. Response: if those benefits are worth at least $70 a week, or if the stop can be made cheaper, the argument flips. A strong argument names what would change its own conclusion.
Ignoring sunk costs (invented)
A town has already spent $2 million on half of a parking garage. Finishing it would cost $3 million more, and planners value the finished garage's benefits at $2.5 million. Should the town finish it?
Result: The $2 million is sunk: it is spent whether the town finishes or stops. The choice now is between MB $2.5 million and MC $3 million, so finishing loses $0.5 million. The marginal argument is against finishing, even though stopping feels like "wasting" the first $2 million. (If the benefits of finishing were above $3 million, the argument would be for finishing.)
Teacher tip. Watch for three shortcuts: comparing totals at one level instead of the next step, comparing averages (cost per unit across all units, not the next unit), and counting sunk costs. Each one answers a different question from the one the council or business is actually deciding.
Guided Practice15-20 minutes
How the federal government weighs benefits and costs. Context note: the Office of Management and Budget (OMB), part of the Executive Office of the President, reviews major federal regulations. Its Circular A-4, issued in 2003, tells agencies how to analyze a proposed rule's benefits and costs. "Stringency" means how strict a rule is; "incremental" means the change from one option to the next, the same idea as marginal; "BCA" means benefit-cost analysis; DOE is the U.S. Department of Energy. Read Source 1 aloud. Glossary: "monetary units" (dollars), "regulatory" (about rules that agencies issue), "baseline" (what would happen with no new rule), "qualitatively" (in words rather than numbers), "performance standards" (rules that set how well a product must work, here how much electricity a refrigerator may use).
1In general, both the benefits and costs associated with a regulation will increase with the level of stringency (although marginal costs generally increase with stringency, whereas marginal benefits may decrease). You should study alternative levels of stringency to understand more fully the relationship between stringency and the size and distribution of benefits and costs among different groups. [...]
[...]
2A distinctive feature of BCA is that both benefits and costs are expressed in monetary units, which allows you to evaluate different regulatory options with a variety of attributes using a common measure. By measuring incremental benefits and costs of successively more stringent regulatory alternatives, you can identify the alternative that maximizes net benefits.
3The size of net benefits, the absolute difference between the projected benefits and costs, indicates whether one policy is more efficient than another. The ratio of benefits to costs is not a meaningful indicator of net benefits and should not be used for that purpose. It is well known that considering such ratios alone can yield misleading results. Even when a benefit or cost cannot be expressed in monetary units, you should still try to measure it in terms of its physical units. If it is not possible to measure the physical units, you should still describe the benefit or cost qualitatively. [...]
[...]
4[...] It is not adequate simply to report a comparison of the agency's preferred option to the chosen baseline. Whenever you report the benefits and costs of alternative options, you should present both total and incremental benefits and costs. You should present incremental benefits and costs as differences from the corresponding estimates associated with the next less-stringent alternative. It is important to emphasize that incremental effects are simply differences between successively more stringent alternatives. Results involving a comparison to a "next best" alternative may be especially useful.
5In some cases, you may decide to analyze a wide array of options. In 1998, DOE analyzed a large number of options in setting new energy efficiency standards for refrigerators and freezers and produced a rich amount of information on their relative effects. This analysis -- examining more than 20 alternative performance standards for one class of refrigerators with top-mounted freezers -- enabled DOE to select an option that produced $200 more in estimated net benefits per refrigerator than the least attractive option. [...]
Office of Management and Budget, Executive Office of the President, Circular A-4, Regulatory Analysis (Source 1: how federal agencies weigh benefits and costs) (2003). US government work (17 U.S.C. 105). Source text.
Translate the terms. Prompt: rewrite the second sentence of paragraph 2 using the words "marginal" and "strict." Teacher note: by measuring the marginal benefits and costs of stricter and stricter options, an agency can find the option with the greatest net benefit. Connect this to the water utility example.
Next step, not first step. Prompt: paragraph 4 says to measure incremental effects against "the next less-stringent alternative." Using the water utility example, what is the incremental cost of Option 3? Teacher note: compare Option 3 with Option 2, not with no treatment at all: $10 million - $5 million = $5 million.
Why dollars? Prompt: paragraph 2 says benefit-cost analysis expresses benefits and costs "in monetary units." Why does a common measure help an agency compare options? Teacher note: it lets very different effects, such as health, time and equipment, be added up and compared on one scale.
Pair check. Pairs write one sentence explaining why paragraph 1 tells analysts to study "the distribution of benefits and costs among different groups," not only the totals. Collect the sentences; Quiz questions 1-4, 16 and 20 use Source 1.
Independent Practice15-20 minutes
A city bus route. Source 2 is an invented scenario with invented estimates, written for this page. Students read it and study the table.
1Invented scenario, written for this page. Harbor City is a fictional city of 160,000 people. Its bus Route 9 runs from the east-side neighborhoods to the hospital and the community college. Today 3 buses an hour run on the route during the weekday rush periods, and riders complain about crowded buses and long waits at the stops.
2The city's transit planners estimated, for each possible number of buses an hour, the total value to riders each weekday (time saved waiting, fewer missed connections and new riders who could now use the bus) and the total cost of running that service each weekday (drivers, fuel and upkeep). Up to 5 buses an hour, the agency can use buses it already owns. A 6th or 7th bus an hour would have to be leased from a private company, which raises the cost of each of those buses.
3Fares now cover about one-quarter of the route's cost; the rest comes from the city budget. The planners' estimates are in the table below. The city council will vote next month on whether to change the number of buses.
SVHS (invented scenario written for this page), Route 9 in Harbor City (Source 2: invented scenario). Original passage written for this page.
Route 9 planners' estimates per weekday (invented data)
Buses an hour at rush periods
Total value to riders per weekday
Total cost of service per weekday
2
$6,000
$2,400
3
$8,400
$3,600
4
$10,000
$4,800
5
$11,000
$6,000
6
$11,600
$7,800
7
$11,900
$9,600
Invented data for Source 2. Values and costs are for the whole weekday's rush-period service at each level.
Students answer on their own: (1) Explain in your own words what the "total value to riders" includes. (2) Why does the cost of each added bus rise after 5 buses an hour? (3) Name three groups who would gain or pay if the number of buses changed, and how. Then add two columns to your copy of the table, MB and MC, for every step from 2 to 7 buses. Quiz questions 5-10, 13-15 and 17-19 use Source 2.
Closure15-20 minutes
Two arguments to judge. Introduce Source 3, two invented council speeches, for the quiz and homework. Students read them and note, for each, whether it uses marginal benefits and marginal costs.
1SVHS-written sample arguments, invented for this page. Two members of the fictional Harbor City council spoke at a public hearing on Route 9.
2Councilmember Reyes: "I support going to 6 buses an hour. Look at the planners' table: at 6 buses, riders get $11,600 of benefits a day, and the cost is only $7,800. Benefits are bigger than costs at every level in the table, so every bus we add is worth it. Our riders deserve the best service we can give them."
3Councilmember Okafor: "I support keeping 3 buses an hour. The city spent $2 million last year on the new bus garage, and more buses will never earn that money back. Besides, at 3 buses the cost is only $1,200 a day for each bus, and the cost per bus only goes up from there. We should not throw good money after bad."
SVHS (sample arguments written for this page), Two Council Arguments (Source 3: SVHS-written sample arguments). Original passage written for this page.
Exit ticket: In two sentences, explain the difference between asking "Are total benefits bigger than total costs?" and asking "Is the next step worth it?"
Teacher note on the sources: Source 1 is quoted exactly from OMB Circular A-4 as issued in 2003, with two footnote numbers left out; OMB has revised the circular since then, and the lesson does not take a position on any version or on any regulation. Sources 2 and 3 and all worked examples are invented. Councilmembers Reyes and Okafor are fictional; their arguments were written to show common reasoning errors, not to represent any party or real person. Rubrics score the use of marginal reasoning and evidence, so an argument for or against a proposal can earn full credit.
Differentiation Strategies
For Struggling Students
Give the Route 9 table with blank MB and MC columns and the first row filled in as a model
Provide an argument frame: "I am for/against ___ because the next step adds MB of ___ but costs MC of ___. Someone might say ___, but ___."
Use the pizza warm-up as an anchor: "Is the next slice worth it?" before each new problem
For Advanced Students
Explain why Diagram 2 uses straight lines and what changes if marginal cost is flat, as it is for the first buses in Source 2
Research one real benefit-cost analysis published by a federal agency and report which alternatives it compared and which benefits it could not put in dollars
Rewrite Councilmember Okafor's speech so that it argues for 3 buses using only marginal reasoning, and judge whether the new argument works
Assessment Guidance
What to Look For
Strong answers compute MB and MC correctly as differences between neighboring levels, compare them for the specific step being argued about, state a clear claim, and answer a counterclaim, such as an uncounted benefit, an uncertain estimate or a group that bears the cost. Watch for three errors: comparing total benefit with total cost at one level; using averages instead of the next unit's cost; and counting money already spent.
02
Classroom Activities
3 Activities
1
Marginal Ladder
20 minGroups of 3
Each group gets one of 4 decision cards with a total-benefit and total-cost table (all invented). The group computes MB and MC for each step, finds the level with the greatest net benefit, and presents a one-minute argument to the class.
The 4 Decision Cards (invented)
Park mowing: mowings a month 1, 2, 3, 4; total benefit $900, $1,500, $1,800, $1,950; total cost $400, $800, $1,200, $1,600.
Library evening hours: evenings a week 1, 2, 3, 4; total benefit $700, $1,200, $1,500, $1,650; total cost $350, $700, $1,050, $1,400.
Street sweeping: passes a month 1, 2, 3, 4; total benefit $5,000, $8,000, $10,000, $11,000; total cost $2,500, $5,000, $7,500, $10,000.
Snack bar at a skating rink: workers on a Saturday 1, 2, 3, 4; total extra sales $600, $1,000, $1,250, $1,350; total cost $150, $300, $450, $600.
Answer Key for the Teacher
Card 1: MB $900, $600, $300, $150; MC $400 each; best is 2 mowings (net $700).
Card 2: MB $700, $500, $300, $150; MC $350 each; best is 2 evenings (net $500).
Card 3: MB $5,000, $3,000, $2,000, $1,000; MC $2,500 each; best is 2 passes (net $3,000).
Card 4: MB $600, $400, $250, $100; MC $150 each; best is 3 workers (net $800).
Discussion Questions
On which card does the last step taken have MB closest to MC? What would a small change in the estimates do?
Which card's benefits would be hardest to measure in dollars? How would you describe them instead?
2
Argument and Rebuttal
25 minPairs, then groups of 4
Each pair receives one invented proposal with MB and MC estimates and writes a one-paragraph argument for or against it. Pairs then swap with another pair, which writes the strongest rebuttal it can. The four students together decide which paragraph uses marginal reasoning better.
The 2 Proposals (invented)
A second school nurse: a high school considers adding a second nurse for $55,000 a year. Planners estimate fewer early dismissals and faster care worth $48,000 a year, plus benefits they cannot price, such as students' sense of safety.
A longer farmers' market: a city considers keeping its Saturday market open a fifth hour. The fifth hour would add about $900 in sales for the vendors and cost the city $400 for staff and cleanup, while some vendors say they would rather go home.
Argument Template
Claim: for or against the proposal
Evidence: the MB and MC of this step, with numbers
Reasoning: why comparing the margins answers the question
Counterclaim and response: an uncounted benefit or cost, an uncertain estimate, or a group that bears the cost
Scoring Note
Score the use of MB, MC and the counterclaim, not the side chosen. On proposal 1, a pair arguing for the nurse must explain why the unpriced benefits are worth at least the $7,000 gap; a pair arguing against must answer that point.
3
Spot the Error
15 minPairs
Pairs sort 8 short statements (all invented) by the reasoning they use: correct marginal reasoning, total instead of marginal, average instead of marginal, sunk cost, or ignoring who bears the cost. Then each pair rewrites two flawed statements so they use marginal reasoning.
The 8 Statement Cards (invented)
"We paid $40,000 for this software, so we must keep using it even though a free program works better."
"Our first three crossing guards cost $90 a day in all, so a fourth would cost about $30." (The fourth would be paid $45.)
"A fourth tutor adds $300 of benefit a week and costs $250, so hiring one is worth it."
"The festival's total benefits are $50,000 and its total costs are $30,000, so making it a day longer must pay off."
"Adding the ninth inning of practice costs us nothing, because the field is already paid for this season."
"The new road saves drivers $2 million a year and costs $1.5 million, so it is fine that the families it displaces get nothing."
"The fifth lifeguard adds $80 of safety value a day and costs $120, so we should not hire one unless we find benefits we missed."
"We have already trained six new drivers, so we may as well buy six new buses for them."
Answer Key for the Teacher
Correct marginal reasoning: 3 and 7.
Total instead of marginal: 4.
Average instead of marginal: 2.
Sunk cost: 1, 5 and 8 (for 5, the field cost is sunk, but players' and coaches' time is still a marginal cost).
Ignores who bears the cost: 6.
Discussion Question
Statement 6 may pass a benefit-cost test overall. Why would Circular A-4 still ask an agency to look at how benefits and costs fall on different groups?
03
Diagrams & Visual Aids
2 diagrams
Diagram 1: Marginal Benefit and Marginal Cost of Each Step (Water Utility, Invented)
Bars drawn to scale for the invented water utility example in Direct Instruction, in millions of dollars a year. Each pair compares the extra benefit and the extra cost of one step up in treatment. Steps where MB is at least MC are worth taking; the first step where MC is above MB is where to stop.
Diagram 2: The Marginal Rule
A general picture, not tied to the lesson's data: marginal benefit usually falls and marginal cost usually rises as an activity grows. Net benefit is greatest where the two meet.
04
Homework Assignment
~30 min
D2.Eco.2.9-12 Homework: Marginal Arguments
Directions: Part 1 uses new invented problems. Part 2 uses Sources 1-3 in the lesson plan. Show MB and MC for every step you discuss, and write arguments in complete sentences.
Part 1: New Decisions (Problems 1-3)
Invented example: a garden center is deciding how many extra cashiers to schedule on spring Saturdays. The first extra cashier would keep about $400 of sales that would be lost to long lines, the second $250 and the third $130. Each extra cashier costs $160 for the day. How many extra cashiers should it schedule, and how much does that add to its net benefit? Write a two-sentence argument against scheduling one more than that.
Invented example: a state is deciding how many miles of new highway guardrail to install. Total yearly benefits (crash costs avoided) are $30 million for 50 miles, $48 million for 100 miles and $57 million for 150 miles; total costs are $12 million, $26 million and $44 million. Find MB and MC for each 50-mile step and the option with the greatest net benefit.
Write your own short example of a sunk-cost error from school, sports or work (invented, no names). Then rewrite the decision using marginal benefits and marginal costs.
Part 2: Using the Sources (Problems 4-6)
Suppose a new rider survey shows that Route 9's planners underestimated every step's value: each MB in Source 2 is really 20% higher, while costs are unchanged. Recalculate the MB of the 5th and 6th buses an hour. Does the best number of buses change? Explain.
Invented example: a school district can retrofit old school buses to cut their exhaust. Total yearly benefits (health) are $400,000 for 40 buses, $640,000 for 80 and $760,000 for 120; total costs are $160,000, $360,000 and $640,000. Following Source 1, paragraph 4, build a table of incremental benefits and costs measured from the next less strict option, and say which option you would argue for.
Write a one-page argument for or against a proposal to change Route 9 to a number of buses of your choice. Use MB and MC from Source 2, at least one idea from Source 1, a rebuttal of one of the councilmembers in Source 3, and a counterclaim about a group that would bear the cost or a benefit that is hard to put in dollars.
Rubric
Criterion
Full Credit (2 pts)
Partial Credit (1 pt)
No Credit (0 pts)
Marginal Calculations
MB and MC correct for every step; Problems 1, 2, 4 and 5 correct
One or two errors
Totals used instead of margins
Claim and Evidence
Clear claim backed by the MB and MC of the step in question
Claim with partial or general evidence
No claim
Counterclaim
Names and answers an uncounted benefit or cost, an uncertain estimate or an affected group
Names a counterclaim without answering it
None
Use of Sources
Accurate use of Sources 1-3, including a rebuttal in Problem 6
Sources used loosely
Sources not used
05
Quiz: 20 Questions
Interactive, with answers
Instructions
Questions 1-4, 16 and 20 use Source 1 (OMB Circular A-4) in Guided Practice. Questions 5-10, 13-15 and 17-19 use Source 2, the invented Route 9 scenario and its table, in Independent Practice. Questions 11 and 12 use Source 3 in Closure. Your score updates as you answer, and Reset quiz clears everything.
Multiple choice: pick an option to check it. Short answer: write your answer, then reveal the model answer.
0 of 20 answered · 0 correct
Question 1 of 20 · Multiple Choice
According to Source 1, paragraph 2, what does measuring incremental benefits and costs of more and more stringent alternatives allow an agency to do?
Answer: C
Paragraph 2 says, "By measuring incremental benefits and costs of successively more stringent regulatory alternatives, you can identify the alternative that maximizes net benefits." Choice A is not the purpose given. Choice B contradicts the paragraph's first sentence, which stresses monetary units. Choice D is the opposite: paragraph 1 says marginal costs generally rise with stringency, so stricter is not always better.
Question 2 of 20 · Multiple Choice
What does Source 1, paragraph 3, say about the ratio of benefits to costs?
Answer: B
OMB writes, "The ratio of benefits to costs is not a meaningful indicator of net benefits and should not be used for that purpose," because ratios alone "can yield misleading results." Choices A and D reverse that guidance. Choice C invents a rule that is not in the source.
Question 3 of 20 · Multiple Choice
According to Source 1, paragraph 4, what should an agency present whenever it reports the benefits and costs of alternative options?
Answer: A
Paragraph 4 says, "Whenever you report the benefits and costs of alternative options, you should present both total and incremental benefits and costs," and that comparing only the preferred option with the baseline "is not adequate." Choice B is the comparison OMB calls not adequate. Choice C leaves out benefits and the other options. Choice D is the ratio that paragraph 3 says "should not be used" as a measure of net benefits.
Question 4 of 20 · Multiple Choice
In the Department of Energy example in Source 1, paragraph 5, what did examining more than 20 alternative refrigerator standards allow DOE to do?
Answer: D
OMB says the analysis "enabled DOE to select an option that produced $200 more in estimated net benefits per refrigerator than the least attractive option." Comparing many levels showed where net benefits were highest. Choice A assumes stricter is better. Choice B contradicts the $200 difference. Choice C misreads "one class of refrigerators with top-mounted freezers," which was the class being studied.
Question 5 of 20 · Multiple Choice
Use the table in Source 2. What is the marginal benefit of going from 3 to 4 buses an hour?
Answer: D
Marginal benefit is the change in total value: $10,000 - $8,400 = $1,600 a weekday. Choice A is the total value at 4 buses, not the change. Choice B is the average value per bus at 4 buses ($10,000 / 4). Choice C is the marginal cost of that step ($4,800 - $3,600), not its benefit.
Question 6 of 20 · Multiple Choice
Use the table in Source 2. What is the marginal cost of going from 5 to 6 buses an hour?
Answer: B
$7,800 - $6,000 = $1,800 a weekday, higher than earlier steps because the 6th bus must be leased. Choice A is the marginal cost of the earlier steps, using owned buses. Choice C is the total cost at 6 buses. Choice D is the average cost per bus at 6 buses ($7,800 / 6).
Question 7 of 20 · Multiple Choice
Use the table in Source 2. Which number of buses an hour gives the greatest net benefit?
Answer: C
Net benefit is total value minus total cost at each level. It rises from $3,600 at 2 buses to $5,200 at 4 buses ($10,000 - $4,800) and is lower at every level above 4, so 4 is best. Choice A has the highest benefit-cost ratio (6,000 / 2,400 = 2.5), the misleading measure Source 1 warns about. Choice B is Councilmember Reyes's proposal. Choice D has the highest total value but the lowest net benefit ($11,900 - $9,600 = $2,300).
Question 8 of 20 · Multiple Choice
Should Harbor City add a 5th bus an hour if it is already running 4? Which reasoning is correct?
Answer: B
MB of the 5th bus is $11,000 - $10,000 = $1,000; MC is $6,000 - $4,800 = $1,200. It would lower net benefit by $200 a weekday. Choice A compares totals ($11,000 against $6,000). Choice C is true but not a reason: the owned bus still costs $1,200 a day to run. Choice D is false and the wrong test: the average cost per bus is $1,200 at both 4 and 5 buses, and averages do not decide the next step.
Question 9 of 20 · Multiple Choice
Use the table in Source 2. What is the net benefit per weekday at 5 buses an hour?
Answer: A
$11,000 - $6,000 = $5,000. Choice B is the marginal benefit of the 5th bus. Choice C adds total value and total cost instead of subtracting. Choice D is the 5th bus's marginal net benefit ($1,000 - $1,200).
Question 10 of 20 · Multiple Choice
Invented change to Source 2: a state grant lowers the cost of every added bus, owned or leased, to $900 a weekday. Values stay the same. How many buses an hour would now give the greatest net benefit?
Answer: D
Compare each step's MB with the new MC of $900: the 5th bus adds $1,000, more than $900, so add it; the 6th adds $600, less than $900, so stop at 5. Choice A ignores the grant. Choices B and C keep adding buses whose MB ($600, then $300) is below $900.
Question 11 of 20 · Multiple Choice
What is the main error in Councilmember Reyes's argument in Source 3?
Answer: A
Reyes reasons that because "Benefits are bigger than costs at every level in the table, ... every bus we add is worth it." Totals can stay above costs while the next bus loses money: the 5th and 6th buses each add less value than they cost. Choice B is not an error in his reasoning. Choice C would not fix his logic. Choice D describes Councilmember Okafor's error.
Question 12 of 20 · Multiple Choice
Which two errors does Councilmember Okafor make in Source 3?
Answer: C
The $2 million garage is already spent whatever the council decides, so it is a sunk cost. And "$1,200 a day for each bus" is an average; the question is the cost of the next bus, which is also $1,200 at the 4th step and is outweighed by its $1,600 benefit. Choice A describes Reyes. Choices B and D are not in his speech.
Question 13 of 20 · Multiple Choice
According to Source 2, which group pays most of the marginal cost of adding buses to Route 9?
Answer: C
Source 2 says "Fares now cover about one-quarter of the route's cost; the rest comes from the city budget," so about three-quarters of each added bus's cost falls on the city budget that taxpayers fund. Choice B overstates the riders' share. Choices A and D are not supported: the leasing company is paid, and drivers' pay is part of the cost, not a cut.
Question 14 of 20 · Multiple Choice
Which piece of evidence most strongly supports an argument against running a 7th bus an hour?
Answer: A
MB of the 7th bus is $11,900 - $11,600 = $300 and MC is $9,600 - $7,800 = $1,800, so its value is $300 / $1,800 = one-sixth of its cost, and it would lower net benefit by $1,500 a weekday. Choice B shows that value still rises, which by itself supports adding the bus. Choice C is a total with nothing to compare it to. Choice D is a reason for more service, not against it.
Question 15 of 20 · Short Answer
Construct an argument for the number of buses an hour that Route 9 should run. Include a claim, MB and MC evidence for the last bus you would add and for the next bus you would not add, your reasoning, and one counterclaim with a response.
Model answer: Claim: Harbor City should run 4 buses an hour. Evidence: the 4th bus adds more value a weekday (its MB, found in Question 5) than its MC of $4,800 - $3,600 = $1,200; the 5th bus adds only $11,000 - $10,000 = $1,000 and costs $1,200, so it would subtract $200. Reasoning: net benefit is greatest at the last step where MB is at least MC, here 4 buses. Counterclaim: the planners may have left out benefits such as less car traffic. Response: those benefits would have to be worth more than $200 a weekday to justify a 5th bus, and the city could test that by counting riders after the change. Rubric: 1 point for the claim; 1 point for correct MB and MC of both steps; 1 point for reasoning; 1 point for a counterclaim with a response.
Question 16 of 20 · Short Answer
Source 1, paragraph 1, tells analysts to study "the distribution of benefits and costs among different groups." Explain why the MB-MC result for Route 9 might not settle the question for every group.
Model answer: The MB-MC comparison adds up value to all riders and cost to the city as if a dollar were the same for everyone. But the riders on Route 9 may include hospital workers and college students without cars, for whom shorter waits matter a great deal, while three-quarters of the cost falls on taxpayers citywide. A council might accept a small net loss on a 5th bus to help a group with few other options, or reject a bus if the burden falls on taxpayers who never ride. The marginal analysis is the starting point, and the distribution is a reason to argue about it. Rubric: 1 point for naming two groups; 1 point for explaining why totals can hide how costs and benefits fall on them.
Question 17 of 20 · Short Answer
Construct an argument against running a 6th bus an hour, if the city were already running 5. Use MB and MC.
Model answer: Claim: the city should not add a 6th bus. Evidence: the 6th bus adds $11,600 - $11,000 = $600 of value a weekday, but its MC (Question 6) is three times that because it must be leased, so it would lower net benefit by $1,200 a weekday, about $300,000 over 250 weekdays. Reasoning: a step is worth taking only if its MB is at least its MC. Counterclaim: riders might value crowding relief more than planners did; response: the value would have to triple to cover the leased bus's cost. Rubric: 1 point for correct MB and MC; 1 point for the claim and reasoning; 1 point for a counterclaim and response.
Question 18 of 20 · Short Answer
Suppose planners find a benefit they missed: a 5th bus would take enough cars off the road to save other drivers about $500 a weekday in time and fuel. Recalculate the 5th bus's marginal benefit and explain how the argument changes.
Model answer: New MB of the 5th bus = $1,000 + $500 = $1,500, compared with MC of $1,200, so the 5th bus now adds $300 of net benefit a weekday and the best number becomes 5. The 6th bus is still not worth it, since its MB of $600 is still far below its MC. The argument changes from against the 5th bus to for it, which shows why a strong argument lists what it may have left out. Rubric: 1 point for the new MB; 1 point for the new conclusion; 1 point for checking the 6th bus.
Question 19 of 20 · Short Answer
Write a short rebuttal (4-5 sentences) to Councilmember Okafor that a supporter of adding buses could give at the hearing.
Model answer: The $2 million garage is already built, and it will cost the same whether we run 3 buses or 4, so it should not decide this vote. The question is whether the next bus is worth what it costs. The planners' table shows that a 4th bus adds more value to riders each weekday than the $1,200 it costs to run, so adding it is a gain, not throwing good money after bad. Rubric: 1 point for identifying the sunk cost; 1 point for using the 4th bus's MB and MC; 1 point for a clear, respectful rebuttal.
Question 20 of 20 · Short Answer
Source 1, paragraph 3, says a benefit that cannot be put in dollars should still be measured in physical units or described in words. Name one such benefit or cost of adding buses to Route 9, and explain how you would include it in a marginal argument.
Model answer: Cleaner air from fewer car trips is hard to price. I would measure it in physical units if possible, such as fewer car trips a day, and otherwise describe it in words, then state how large it would have to be to change the result: for the 5th bus, it would need to be worth more than the $200 a weekday gap between MC and MB. Rubric: 1 point for a fitting benefit or cost; 1 point for explaining how it enters the argument, linked to paragraph 3.
0 of 20 answered · 0 correct
06
Frequently Asked Questions
10 Questions
What does D2.Eco.2.9-12 mean?
D2.Eco.2.9-12 asks high school students to use marginal benefits and marginal costs to build an argument for or against a solution to an economic issue. The full text is "Use marginal benefits and marginal costs to construct an argument for or against an approach or solution to an economic issue." It belongs to the Economic Decision Making part of the C3 Framework's economics standards.
What are marginal benefit and marginal cost?
Marginal benefit is the extra gain from one more unit of something, or from the next step up; marginal cost is the extra cost of that unit or step. Both are found by subtracting: the total at the new level minus the total at the old level.
Why focus on marginal benefits and costs?
Because most real decisions are about how much, not all or nothing: one more bus, one more hour, one more step of treatment. The margins answer the question that is actually being decided, which is whether the next step is worth it.
What does "construct an argument" require on this standard?
A claim for or against a specific proposal, evidence from the marginal benefit and marginal cost of the step in question, reasoning that links the two, and a counterclaim with a response. The rubrics on this page score those parts and accept either side.
Is Circular A-4 a real document?
Yes. Circular A-4 is guidance from the federal Office of Management and Budget, issued in 2003, on how agencies analyze the benefits and costs of proposed regulations; it is a US government work. OMB has revised it since then, so the lesson quotes the 2003 text and takes no position on later versions. The bus route, the council speeches and every worked example are invented.
Do students need calculus for D2.Eco.2.9-12?
No. In a high school economics course, marginal values are found by subtracting neighboring rows of a table: the total at one level minus the total at the level before it. Students who know calculus may connect the idea to derivatives, but the standard does not require it.
How is D2.Eco.2.9-12 different from D2.Eco.2.6-8?
The grades 6-8 indicator asks students to evaluate whole approaches to an economic issue by their benefits and costs for groups and society. The grades 9-12 indicator narrows the tool to marginal benefits and marginal costs and asks students to turn that analysis into an argument for or against a solution.
Which course teaches D2.Eco.2.9-12?
It is usually taught in a high school economics course, early in the year with economic reasoning or later with market failures and public policy. It also supports argument writing in social studies, so it pairs well with WHST.11-12.1.
How should students handle estimates that might be wrong?
Treat them as estimates and say so. A strong argument names the estimate it depends on most and explains which way an error would push the conclusion. That turns a weakness into part of the reasoning.
What is a good quick check for D2.Eco.2.9-12?
Give a short table of total benefits and total costs for four levels of an activity students have not seen, and ask them to find the best level and write a two-sentence argument against going one step further. If they cite the MB and MC of that step, they are using the indicator's reasoning.
07
Related Standards
5 standards
These standards connect to D2.Eco.2.9-12: prerequisites to review first, parallel standards at the same level, and next steps that build on it.
Before this lesson
D2.Eco.2.6-8Prerequisite
Evaluate solutions to current economic issues by benefits and costs for groups
Use benefits and costs to evaluate government policies to improve market outcomes
Lesson coming soon
D4.1.9-12Next step
Construct arguments with precise claims and evidence, acknowledging counterclaims
Lesson coming soon
Standard text: National Council for the Social Studies (NCSS), The College, Career, and Civic Life (C3) Framework for Social Studies State Standards: Guidance for Enhancing the Rigor of K-12 Civics, Economics, Geography, and History (Silver Spring, MD: NCSS, 2013). NCSS was not involved in the production of this lesson and does not endorse it.
