The Market Phenomenon

How is the market economic system and the circular flow model linked?

Objectives

• Understand and explain a market and its role in the market economic system

• Understand the “circular flow” of the market system by creating a graphic organizer of the flow

• Compose a narrative of the “circular flow”

What 2 factors do ALL markets

share?

Times Square, N.Y.C.• “district was a mecca for family-oriented tourism and entertainment…”

Chandni Chowk, Delhi“…might actually be possible to get anything in Chandni Chowk: from made-to-order wedding dresses to exotic fruits to refurbished secondhand shoes.”

Marrakech, Morocco• Largest market place in Africa

Hong Kong• One of Asia’s largest markets• Serves the largest population in the world

• What factors did you see???

4 Points of the “Circular Flow”

• All dependant on market activity to drive system…exchange goods/services

• Buyers and sellers to meet and exchange product1. Factor Market2. Business3. Product Market4. Individuals

– No specific order…all components critical

Specifics…

• Factor markets:– Where individuals earn an income– 4 factors of production (C.E.L.L.) are bought and sold– You/your parents work place

• Product market:– Use income to acquire good/services here– $ returns to businesses (factor markets)

• This creates an infinite cycle where wages are exchanged and go on to create more and more goods/services

Watch…

• https://www.youtube.com/watch?v=Hfz1bwK5C4o

• How are individuals and businesses (firms) linked in the market system?

Act…• Create a graphic organizer of the “circular

flow”• Compose a brief narrative of the “flow”

Intro…

• Exchange your narrative with someone near you

• Come up and grab a red, blue (or black) pen, and a highlighter

• Read your partners narrative and identify the 4 pieces of the circular flow model – Red for business– Blue for individual– Yellow for product market– Circle for factor market

“FLOW” Activity

• Moving around the school to 2 different locations in order to highlight the “circular flow” of the market economy

• Complete the sheet as you move• Find the posted explanation of each location’s

relation to the “circular flow” and read it to your group

• 25 MINUTES TO COMPLETE!!

Intro: Mock-market interaction

• Grab a sheet from the front and get into groups

• Read the directions and get startedObjective: • Understand the two types of markets • Understand how individuals and businesses

are both buyers and sellers

Reflection Questions

• With a partner grab a white board, marker and eraser

• I will give out 1 point for the best answer to each question…winning pair will receive a prize

• Ready to begin?

Question #1

• How does the market economic system and the “circular flow” overlap?

Question #2

• How does your paycheck fit into our larger market economy?

Question #3

• During the “Circular Flow” of Conestoga activity, your physical movement around the school was the equivalent of what in the real world?

Question #4

• Where is the governments role in our market’s “circular flow”? Answer and give a specific example.

Question #5

• How could a labor strike effect our community here in Berwyn?

Question #6

• On a scale of 1-10, how important is freedom in a market economy?

Question #7

• Which of the 4 pieces of the “circular flow” is the most crucial to the system?

Question #8

• Explain the role a website like E-bay or Amazon plays in the “circular flow.”

Question #9

• Command Example…• Why does a market system overcome the

command system’s shortcomings?

Question #10

• Why is it important to understand the “circular flow” of our economy?