How

Markets Work!
Principles of Economics
9th Grade
9 class periods- 81 minutes each
McKenzie Kelly
19 February 2015

Desired Results
______________________________________

PA Standards:

6.2.9.D: Explain the laws of supply and demand and how these affect
the prices of goods and services.

6.2.9.B: Explain how competition between buyers and sellers affects price.



Understandings: Students will understand that

The law of demand states that consumers buy more as price increases

The demand curve is downward sloping

Elasticity showcases how much more or how much less people buy when prices
change

Producers respond in the market by raising the price of inelastic goods and
lowering the price of elastic goods

Producers sell more at the higher price according to the law of supply

The supply curve is upward sloping or as price increases supply will also
increase

Producers seek to have increasing marginal returns when looking to hire an

additional labor

Rising costs cause the supply to decrease or shift left because output is reduced
and price is increased

New technology causes the supply to increase or shift right because output is
increased and price is reduced

Equilibrium is the only spot along a supply and demand curve where both sides
are equally happy with both price and quantity

As demand or supply increases or decreases, the point of market equilibrium

will also adjust

Perfect competition is a market structure with a large number of firms that

produce the same product (i.e. Stock market or farm products)

Monopolistic Competition is many companies sell products that are similar, but
are not identical (i.e. different clothes, jolly rancher flavors)

Oligopoly is a market dominated by a few large firms (i.e. airlines, television)

Monopoly is a situation where barriers prevent firms from entering a market

that has a single supplier (i.e. US Postal Service, local water supply, etc.)

Market Power ranges as follows (from highest to lowest): Monopoly, Oligopoly,

Monopolistic Competition, and Perfect Competition

Profit ranges as follows (from highest to lowest): Monopoly, Oligopoly,

Monopolistic Competition, and Perfect Competition

Essential Questions

As consumers, how do we impact the future?

o How is the law of demand proven and/or discredited in our current
market?
o What are the effects of a change in demand on consumers, producers, and
the economy as a whole?
o How does elasticity effect decisions you make daily?

Do producers have more power than consumers?

o How is the law of supply proven and/or discredited in our current
market?
o What decisions are best made at the margin?
o Is the government justified in controlling supply in the market?
o What is the most influential factor in the marketplace? (Cost, preferences,
advertisements, etc.)?

Can absolute balance ever truly exist?

o Is it possible for both consumers and producers to be happy?

o What are the implications if or when perfect balance or happiness is not

achieved in the marketplace?

Which type of market structure would you personally want your business to be
in?
o What are the most distinguished differences between the following
market structures: monopoly, oligopoly, monopolistic competition and
perfect competition?

Outcomes

Students will know (Concepts and Generalizations)

The law of demand

The determinants that create changes in demand and that can cause a shift in the
demand curve

How change in the price of one good can affect demand for a related good

Factors that affect elasticity

The law of supply

Explain the relationship between elasticity of supply and time

How supply and demand create balance in the marketplace

How a market reacts to a fall in supply by moving to a new equilibrium

How a market reacts to shifts in demand by moving to a new equilibrium

The four conditions that are in place in a perfectly competitive market

Characteristics and examples of a monopoly, monopolistic competition, and

oligopoly

How a firm with a monopoly sets output and price, and why companies practice
price discrimination

How firms compete without lowering prices

Students will be able to (Skills and Attitudes)

Create a demand schedule for an individual and a market

Create a demand curve with quantity on the x-axis and price on the y-axis

Explain how firms use elasticity and revenue to make decisions

Interpret a supply graph using a supply schedule

Explain how firms decide how much labor to hire to produce a certain level of a
product

Analyze the production costs of a firm

Identify how determinants such as input costs create changes in supply

Identify 3 ways that the government can influence the supply of a good

Analyze the effects of other factors that affect supply

Weigh the benefits and costs producers must consider when deciding on
quantity and price of a product

Evaluate the effectiveness of various marketing strategies in the marketplace

(advertisements)

Compare a market in equilibrium with a market in disequilibrium

Identify how the government sometimes intervenes in markets to control prices

Analyze the effects of price ceilings and floors

Identify the determinants that create changes in price

Describe prices are output in a perfectly competitive market