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

Circular Flow Diagram

GUIDED NOTES

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?