Supply and Demand



Lesson Title: Supply & demand

Teacher: Ms. Shae Johnson

School: Greenwood laboratory School

Grade level: third

Presenters: Tamara Beucke and Erika Trimble

Materials Needed: Tokens (paper money)

Something of value that the children can bet on

Note cards

Overview:

I. Start out with the supply and demand game

a. Have children bid on candy bar (or whatever it is that you decide to use as the item of value). This can be done with any sort of play money.

b. The person who pays the highest prices will win.

c. After the winner is chosen surprise the children by pulling out many of the same item and note their reaction.

d. Ask the children what they are willing to pay for the new items.

e. After the game is finished ask for their feelings.

II. Have them define what supply and demand means to them.

III. Write supply and demand on the board and their meanings

a. Supply-Amount available for customers to buy.

b. Demand-Amount of money that customers are willing to pay to buy.

IV. Ask the first person why he/she paid so much for the candy bar (why do you think the other people didn’t pay as much for the item)

V. When demand is higher than supply

a. When people want more of a certain item (demand goes up) the available supply goes down prices will rise.

b. Example-When the X-Box first came out it was very expensive now that the excitement has gone down so the supply goes up and the Demand has gone down so has the prices.

VI. Supply exceeds demand

a. When there are more items then people want to buy then the prices will go down because there is a large quantity of a particular item

b. Example-When the price of gas was .99 cents this was because gas was plentiful and there was not a high demand for it.

VII. Supply Shifters

a. Here are some examples of factors that effect supply

i. Changes in the price of what makes the product (example: if the price of sugar goes up then the price of cookies goes up)—or if the price of candy goes up want goes down (at least for the parent buying the candy)

ii. Technology improves (Example-new computer software)

iii. Natural Events (Example-Sugar cane fields experience a drought so the price of sugar goes up the supply goes down.

VIII. Demand Shifters

a. Here are some examples of factors that effect demand

i. Consumer tastes (what a person likes) Example: When a lot of people like Code Red Mountain dew then the demand goes up

ii. Prices of goods that are similar or alike (example: If coke is more expensive then Pepsi then the demand for Pepsi will go up; demand for coke will go down)

iii. Income level-If a parent loses their job then they won’t have the income to go to Toys ‘r’ Us for their kids and the Demand for items will go down.

XI. Game #2

a. This game will teach kids about pricing and demand and it will also touch on Opportunity Costs.

b. Give out magazine clippings of items that are popular (cars, trips, etc) to ½ of the students in the class.

c. Tell them to place a price for these items on a sheet of paper and place this next to the clippings at their desks so it’s not able to be seen.

d. Have the other half of the students go around the room and bid on the items placing the price they think it should be on the other side of the paper.

e. Have the teacher gather all papers and go over them on the board and what their real prices are.

f. Ask the students if they would pay that price for the particular item.

Ask students about supply and demand now that they know it a little better and how they can apply it to their lives.

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