SSEMI1 The student will describe how households, businesses, and governments are interdependent and interact through flows of goods, services, and money.
a. Illustrate by means of a circular flow diagram, the Product market; the Resource market; the real flow of goods and services between and among businesses, households, and government; and the flow of money.
ECONOMIC
INTERDEPENDENCE AND
THE FLOW OF MONEY
How are households, business and
government interrelated through markets
and the flow of money?
ESSENTIAL QUESTION
How do you depend on businesses? How do they
depend on you? Be creative! Explain in 5 or more
sentences
Why are the decisions I (or other students) make
important to you? Explain in 5 or more sentences
ACTIVATING STRATEGY
Microeconomics
Market
Factor Market
Product Market
Economic Interdependency
The Circular Flow Chart
KEY CONCEPTS
Microeconomics: the study of how economic actors (individuals
and businesses) make decisions and are impacted by the
allocation (distribution) of resources.
MICROECONOMICS
A. The circular flow of economic activity
1. Market: A set of arrangements through which buyers
and sellers carry out exchange at mutually agreeable
terms.
2. There are two types of markets
a. Factor markets are where households supply labor
and are paid wages and salaries
1. Individuals- sell resources
2. Businesses- purchase resources
b. Product markets are where households purchase
the productive output of businesses
1. Individuals-purchase goods and services
2. Businesses-sell goods and services
ECONOMIC INTERDEPENDENCE
AND THE FLOW OF MONEY
3. Businesses: are the private producing units in the economy. They are organized as sole proprietorships, partnerships or corporations.
4. Households: supply labor to firms and guide what firms produce through their demands in the market.
5. Governments: collect taxes in order to spend money in ways society deems fit. Government also develops the rules to guide the relationships between businesses and households. (mixed econ)
ECONOMIC INTERDEPENDENCE AND
THE FLOW OF MONEY
6. Economic interdependence: reliance on one
another to provide the goods and services that
people consume.
7. The circular flow chart: the graphic
representation of the free-enterprise economy .
ECONOMIC INTERDEPENDENCE AND
THE FLOW OF MONEY
Spending
$
Goods and Services
Households(Individuals)
$ Expense
Roles:A. Resource
ownersB. Consumers
Business Firms
Role:A. ProducersB. Hire resource
Land, labor, Capital
Inputs for production
(Mouse Click to advance)(Mouse Click to advance)(Mouse Click to advance)(Mouse Click to Advance)
Circular Flow
(Mouse Click to advance)(Mouse Click to advance)
Goods andservices
(Mouse Click to advance)
Revenue
$
(Mouse Click to advance)
Mouse click for next slide© L Reynolds, 1999
Product Market
Role of Ind.:
Buy goods
Role of Busi.:
Sell goods
Factor Market
Role of Ind.:
Sell resource
Role of Busi.:
Buy resources
GovernmentTaxes &
Labor
Taxes &
Goods
Spending
$
Goods and Services
Households(Individuals)
$ Expense
Roles:A. Resource
ownersB. Consumers
Business Firms
Role:A. ProducersB. hire resource
Land, labor, Capital
Inputs for production
(Mouse Click to advance)(Mouse Click to advance)(Mouse Click to advance)(Mouse Click to Advance)
Circular Flow
(Mouse Click to advance)(Mouse Click to advance)
Goods andservices
(Mouse Click to advance)
Revenue
$
(Mouse Click to advance)
Mouse click for next slide© L Reynolds, 1999
Factor Market
Role of Ind.:
Sell resource
Role of Busi.:
Buy resources
Product Market
Role of Ind.:
Buy goods
Role of Busi.:
Sell goods
GovernmentTaxes &
Labor
Taxes &
Goods
BALANCED ASSESSMENT
Circular Flow Simulation
Standards: SSEM1a
Concepts: Factor Market, Product Market, Economic Interdependency, The Circular Flow Chart
Students wil l par t icipate in a demonstration of the circular flow diagram. Teachers wil l provide dif ferent colored paper that represents money, natural resources, capital resources, human resources and a finished good. Approximately half the class wil l act as households holding a col lection of 15 resources (being an unequal mixture of natural, capital and human resources). The other half of the class would be businesses holding ten pieces of money. Businesses would go about the act of buying the necessary resources for the production of their product. Af ter col lecting one each of natural, capital and human resources the businesses wil l exchange that set for one finished good. They wil l then sel l that finished good back to the households. The teacher needs to debrief the simulation by having the students construct the circular flow diagram.
The Circular Flow Chart (Flow Map)
Standard: SSEM1a
Concepts: Factor Market, Product Market, Economic Interdependency, The Circular Flow Chart
1. First pick a product (COKE)
2. Create a flow map that explains how the product goes from households to households.
3. The flow map must have 4 images explaining the flow. (Ex. image of factor market)
4. The flow map must have examples of the product at each section. (Ex. Land, labor, capital needed)
5. Create a flow map that explains how money flows from households to households.
6. Repeat steps 3 and 4.
7. 50pts per Flow Map
BALANCED ASSESSMENT 2
Econoland
Econoland part II
Standard: SSEM1a
Concepts: Factor Market, Product Market, Economic
Interdependency, The Circular Flow Chart
BALANCED ASSESSMENT 3
1. What is microeconomics?
2. What is the factor market?
3. What is the product market?
4. What is economic interdependence?
5. Money flows from the businesses to the?
6. Labor and resources flow from the household to
the?
SUMMARY QUESTIONS (TICKET OUT THE
DOOR)
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
d. Explain how prices serve as incentives in a market economy.
.
DEMAND
How are prices established in a perfectly
competitive market?
What forces lead to changes in supply
and demand?
ESSENTIAL QUESTION
List the names and prices of the last 3 things
you bought. Would you have spent your
money differently if the price were twice as
high? Or half the price?
ACTIVATING STRATEGY
Demand
Law of Demand
Inversely
Demand Schedule
Demand Curve
Change in Quantity Demanded
KEY CONCEPTS
DEMAND AND LAW OF DEMAND
A. Demand: the relationship between the price of a
good or service and the quantity of it that consumers are willing to buy at that price.
B. Law of demand: the quantity demanded varies inversely with price. (if price increases, quantity decreases) or (if price decreases, quantity increases)
DEMAND SCHEDULE AND CURVE
C. Demand schedule: a listing that shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given price.
D. Demand curve: a graphical representation of the law of demand. It slopes downwardbecause, all else constant, the quantity demanded rises (falls) as the price falls (rises)
CHANGE IN QUANTITY DEMANDED
E. Change in quantity
demanded: movement along
a demand curve; caused only
by a change in a good’s own
price.
1. What is demand?
2. Explain the law of demand?
3. The demand curve always slope ____________?
4. A change in quantity demand is caused only by a change in
the items __________?
SUMMARY QUESTIONS (TICKET OUT THE
DOOR)
SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
DEMAND
Identify and illustrate on a graph factors
that cause changes in market supply and
demand.
What forces lead to changes in supply
and demand?
ESSENTIAL QUESTION
List 5 items you would buy more of if your income decreased.
Explain why.
List 5 items you would buy more of if your income increased.
Explain why.
ACTIVATING STRATEGY
Change in Demand
Consumer Income
Consumer Tastes
Substitutes
Complements
Change in Consumer Expectations
Number of Consumers
KEY CONCEPTS
CHANGE IN DEMAND
Change in demand: a
shift in the entire
demand curve, either
right or left, caused
by a change in non-
price determinants
of demand.
CHANGES IN NON-PRICE
DETERMINANTS OF DEMAND
3. Substitutes: consumers buy goods that can be used in place of another good. If the price of a good rises (falls), the demand for its substitute goods will fall (rise).
EX. COKE and PEPSI.
4. Complements: consumersbuy goods that are normally used in conjunction with another good. If the price of a good rises (falls), the demand for its complement goods will fall (rise).
CHANGES IN NON-PRICE
DETERMINANTS OF DEMAND
5. Change in expectations: The way consumers think about the future affects what and how much they will demand. EX. A prediction of a hurricane causes people to demand water, lumber, and gas.
6. Number of consumers: As population increase, more consumers are buying more products.
Graphing Practice 1
Graphing Practice 2
Graphing Practice 3
Graphing Practice 4
Standards: SSEM2a &d, SSEM3a
Concepts: Demand, Law of Demand, Demand Schedule,
Demand Curve, Change in Quantity Demanded, Change in
Demand, Consumer Income, Consumer Tastes, Substitutes,
Complements, Change in Consumer Expectations, Number of
Consumers,
Students will i l lustrate understanding of supply and demand
completing a graphing exercise.
BALANCED ASSESSMENT
1. Given an example of a normal and inferior
good
2. Give one example of how consumers tastes
can change
3. Give two examples of a substitute goods
4. Give two examples of complementary goods
5. Give one example of how expectations for a
good can change
SUMMARY QUESTIONS (TICKET OUT THE
DOOR)
SUPPLY
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
ESSENTIAL QUESTION
What happens to supply and demand as
the price of an item changes?
Identify and illustrate on a graph factors
that cause changes in market supply and
demand.
What forces lead to changes in supply
and demand?
If the price of diamonds when up dramatically
& you where a producer of diamonds would
you try to produce more or less diamonds?
Explain yourself in 5 or more sentences
ACTIVATING STRATEGY
Supply
Law of Supply
Proportionately
Supply Curve
Change in Quantity Supplied
Change in Supply
Input Prices
Inflation
Technology
Expectations
Taxes
Subsidies
Number of Sellers
KEY CONCEPTS
SUPPLY AND LAW OF SUPPLY
Supply: the amount of a product that would be
offered for sale at all possible prices that
could prevail in the market
Law of supply: the quantity supplied varies
proportionately with price. (if price increases,
quantity increase) or (if price decreases,
quantity decreases)
SUPPLY CURVE AND CHANGE IN
QUANTITY SUPPLIEDSupply curve: a graphical
representation of the law of supply. It slopes upward because, all else constant, the quantity supplied will rise (fall) as price rises (fall).
Change in quantity supplied: movement along a supply curve; caused only by a change in a good’s own price.
CHANGE IN SUPPLY
Change in supply: a
shift in the entire
supply curve, either
right or left, caused
by a change in non-
price determinants
of supply.
CHANGE IN NON-PRICE
DETERMINANTS OF SUPPLY 1. Input prices: changes in
wages, rent and other producer’s costs can change the current supply of a product. ( INFLATION)
2. Technology: changes in producer’s technology can change the current supply of a product.
3. Expectations: changes in producer’s expectations can change the current supply of a product.
CHANGE IN NON-PRICE
DETERMINANTS OF SUPPLY4. Taxes on/ subsidies to
sellers: changes of producer’s taxes or subsidies can change the current supply of a product.
a. subsidy: a government
payment to an individual,
business, or other group
to encourage or protect a
certain type of economic
activity (farming)
5. Number of sellers: changes in the number of producersin a market can change the current supply of a product.
Graphing Practice 1
Graphing Practice 2
Graphing Practice 3
Graphing Practice 4
Standards: SSEM2a &d, SSEM3a
Concepts: Supply, Law of Supply, Supply Curve, Change in
Quantity Supplied, Change in Supply, Input Prices, Inflation,
Technology, Expectations, Taxes, Subsidies, Number of Sellers
Students will i l lustrate understanding of supply by completing
a graphing exercise.
BALANCED ASSESSMENT
1. According to the Law of Supply, what is the relationship
between quantity supplied and price?
2. Movement along the supply curve can only be caused by
______________.
3. A shift in the entire supply curve (change in supply) can only
be cause by ________________________________.
4. List 4 non-price determinants of supply
SUMMARY QUESTIONS(TICKET OUT THE
DOOR)
EQUILIBRIUM
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity
ESSENTIAL QUESTIONS
Illustrate on a graph how supply and
demand determine equilibrium price and
quantity.
What forces lead to changes in supply
and demand?
At Paulding County High School, what is
the appropriate price for a candy bar?
At a Movie theater, what is the
appropriate price for a candy bar?
ACTIVATING STRATEGY
Equilibrium
Equilibrium Price
Market Clearing Price
Equilibrium Quantity
Shortage
Surplus
KEY CONCEPTS
EQUILIBRIUM
Equilibrium: where supply equals demand.
Equilibrium price: when quantity demanded equals quantity supplies prices have no tendency to change and the market is in equilibrium. Also known as the market clearing price.
Equilibrium quantity: when quantity demanded equals quantity supplied, quantities have no tendency to change and the market is in equilibrium.
EQUILIBRIUM
WHAT HAPPENS WHEN PRICES
IS BELOW EQUILIBRIUM PRICE?
If price is below the
equilibrium price a
shortage occurs.
A shortage is when
quantity demanded
is greater than
quantity supplied.
WHAT HAPPENS TO PRICES WHEN IT IS
EXCEEDS EQUILIBRIUM PRICE
If the prices exceed
the equilibrium
price, a surplus
occurs.
A surplus is when
quantity supplied is
greater than
quantity demanded.
DEMAND CURVE SHIFT
Action Price Quantity Equilibrium
Demand
Rises
Rises Rises Shifts to the Right
Demand
Falls
Decreases Decreases Shift to the Left
DEMAND CURVE SHIFT
Graph 1: Demand rise, equilibrium shifts to right
Graph 2: Demand fall, equilibrium shifts to left
SUPPLY CURVE SHIFT
Action Price Quantity Equilibrium
Supply
Rises
Decreases Rises Shifts to the Right
Supply
Falls
Rises Decreases Shift to the Left
SUPPLY CURVE SHIFT
Graph 1. Supply rise, equilibrium shifts to right
Graph 2. Supply fall, equilibrium shifts to left
Supply and Demand Graphing 1
Supply and Demanded Graphing 2
Standard: SSEMI3
Concepts: Supply, Demand, Equilibrium
Students will i l lustrate understanding of supply and demand
by completing a graphing exercise.
BALANCE ASSESSMENT
Commodities Market Simulation
Standards:SSEMI2b,c, &d
Concepts: Supply and Demand
Students will simulate a commodities market with half the class acting as buyers and the other half sellers. The teacher will supply two dif ferent colored cards, one for buyers and one for sellers with a varying range of prices for both buyers and sellers. Buyers should try to sell below what is on their card and sellers should try to sell for more. Both buyers and sellers should record each transaction noting the price on cards and the transaction price. Prizes can be awarded for the highest net gain in both the seller and buyer category. After the completion of three 2 minute rounds, the teacher can construct both a supply and demand curve using the prices determined by the buyers and sellers in the market.
BALANCED ASSESSMENT 2
SUMMARY QUESTIONS
1. What is equilibrium?2. What happens when the price of a good is
higher than the equilibrium price (market price)?
3. What happens when the price of a good is below the equilibrium price?
4. What happens to the price and quantity of a product as demand for the product increases?
5. What happens to the price and quantity of a product as the supply for the product decreases?
GOVERNMENT
INTERVENTION WITH
DEMAND AND
SUPPLY
SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages.
ESSENTIAL QUESTION
How does government control supply and
demand?
What forces lead to changes in supply
and demand?
How does government control supply
and demand?
ACTIVATING STRATEGY
Price Ceiling
Rent Control
Price Floor
Minimum Wage
KEY CONCEPTS
PRICE CEILING
Price ceiling: a maximum legal price above which a good or service cannot be sold. EX. RENT CONTROL
If the price is below the equilibrium a shortage occurs: In the graph to the right notice how the quantity demanded is greater than the quantity supplied.
PRICE FLOOR
Price floor: A minimum legal price below which a good or service cannot be sold. EX. MINIMUM WAGE
If the prices exceeds the equilibrium price, a surplus occurs: In the graph to the left notice how the quantity supplied is greater that the quantity demanded.
Supply, Demand, and Price Graphing- Application Activity
Standards: SSEMI3
Concepts: Price Ceiling and Price Floor
Students will i l lustrate understanding of supply, demand, and
market equilibrium price and quantity by completing a
graphing exercise. Activity sheets and directions are attached.
Materials needed: paper, colored pencils, and rulers.
BALANCED ASSESSMENT
“What happens when the government helps out”
Standards: SSEMI3
Concepts: Price Ceil ing and Price Floor
After explaining the basic market workings of price, the teacher wil l have the board divided into two par ts. In each par t there wil l be a question above a large price graph. The students wil l : Answer each of the two questions Question 1: Should the government raise minimum wage? Question 2: Should the government lower the cost of gas? Discuss the answers for question 1
Draw a Price Floor and analyze the ―gap between the Supply and Demand
Label Supply (Workers looking for work)
Label Demand (Employers looking for workers)
Increase the minimum wage on the graph
Analyze the change in the Supply -Demand Gap
Explain how this leads to a surplus (or more unemployment )
Continue to next sl ide
BALANCED ASSESSMENT 2
Discuss the answer for question 2 (Question 2: Should the
government lower the cost of gas? )
Draw a Price Ceiling and analyze the ―gap‖ between the
Supply and Demand
Label Supply (Businesses willing/able to sell gas)
Label Demand (Consumers willing/able to buy gas)
Lower the price of gas
Analyze the change in the Supply -Demand Gap
Explain how this leads to a shortage (or less gas stations
willing/able to sell gas)
BALANCED ASSESSMENT CONTINUED
SUMMARY QUESTIONS (TICKET OUT THE
DOOR)
1. What is an example of a government
enforced price ceiling?
2. What is an example of a government
enforced price floor?
3. What is the difference between a price
ceiling and a price floor?
ELASTICITY
SSEMI3 The student will explain how markets,
prices, and competition influence economic
behavior.
c. Define price elasticity of demand and supply.
ESSENTIAL QUESTION
What is the price elasticity of demand
and supply?
What forces lead to changes in supply
and demand?
Why might you continue buying gas even if the
price goes up to $8 a gallon? Explain why in 3
or more sentences
ACTIVATING STRATEGY
Elasticity
Measuring Elasticity
Elasticity of Demand
Price Elasticity of Demand
Price Inelasticity of Demand
Price Elasticity of Supply
Price Inelasticity of Supply
KEY CONCEPTS
ELASTICITY
Elasticity: measures the sensitivity between two
economic variables.
Measuring elasticity is important because it
allows individuals, firms and society to
estimate the impacts that economic decisions
will have .
ELASTICITY AND DEMAND
Price elasticity of
demand: a change in
price has a relatively
large effect on quantity
demanded.
Price inelasticity of
demand: a change in
price has relatively
little effect on quantity
demanded.
EX. medicine
ELASTICITY AND SUPPLY
Price elasticity of supply: a change in price has relatively large effect on the quantity supplied. Ex. Stocks
Price inelasticity of supply: a change in price has relatively little effect on the quantity supplied. Ex. Cars
Need Balanced Assessment
BALANCED ASSESSMENT
SUMMARY QUESTIONS (TICKET OUT THE
DOOR)
1. Why do we measure elasticity?
2. What is the difference between the
elasticity of demand and the inelasticity of
demand?
3. What is the difference between the
elasticity of supply and the inelasticity of
supply?
MARKET STRUCTURE
SSEMI4 The student will explain the organization and role of business and analyze the four types of market structures in the U.S. economy.
c. Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition.
Identify the basic characteristics of monopoly, oligopoly,
monopolistic competition, and pure competition .
What factors affect the level of competition in various U.S.
industries?
ESSENTIAL QUESTION
Create a Tree Map, of
the 4 market
structures.
Market Structure:
Perfect Competition,
Monopolistic
Competition, Oligopoly,
Monopoly
List 5 characteristics
of each structure
Draw one image for
each market structure
ACTIVATING STRATEGY
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
Barriers to Enter the Market
Control Over Price
KEY CONCEPTS
PERFECT COMPETITION
1. Number of firms: many
2. Barriers to enter the market: none
3. Control over price: none
4. Type of product: similar or identical
5. Advertisement :none
6. Example: agriculture, shares of stock
MONOPOLISTIC COMPETITION
1. Number of firms: many
2. Barriers to enter the market: fairly easy
3. Control over price: little
4. Type of product: similar but different
5. Advertisement: much
6. Example: airlines, jeans books
OLIGOPOLY
1. Number of firms: few (three or four)
2. Barriers to enter the market: difficult
3. Control over price: some
4. Type of product: some differences
5. Advertisement: much
6. Example: automobiles, breakfast cereal (Kellogg’s, Post, Quaker)
MONOPOLY
1. Number of firms: one
2. Barriers to enter the market: all most impossible
3. Control over price: complete
4. Type of product: unique, no substitute
5. Advertisement: none
6. Example: public water and diamond companies
Market Structure Candy Shoppes
Standards:SSEMI4c
Concepts: Market Structures
Through participation in four rounds of candy buying and
selling, students will simulate the four market structures. By
analyzing each round in the simulation students will derive
the characteristics of market structures from their own
experience.
BALANCED ASSESSMENT 2
Market Structure Double
Bubble Map
Standards:SSEMI4c
Concepts: Pure Competition
and Monopolistic Competition
Using the Double Bubble Map
below, compare and contrast
perfect competition with
monopolistic competition.
You must have a minimum of
three similarities and 3
dif ferences.
BALANCED ASSESSMENT 2
Market Structure Essay
Standards: SSEMI4c
Concepts: Market Structures
BALANCED ASSESSMENT 3
SUMMARY QUESTIONS (TICKET OUT THE
DOOR)
1. What are four characteristics of perfect
competition?
2. What are the differences between a
monopolistic competition and an oligopoly
market?
3. What are four characteristics of a
monopoly?