Created on: June 10, 2009

Website Address: https://library.curriki.org/oer/Introduction-to-Economics

IN COLLECTION

This lesson covers the following topics from micro-economics: supply & demand, the concept of supply and demand "curves", fixed costs, variable costs, the concepts of revenue and profit, and the concepts of cost and revenue "curves".

**Group Size:** Any

**Learning Objectives:**

1. Students will gain a general understanding of the above concepts from micro-economics

2. Students will acquire a working vocabulary for the project using the words "cost and revenue curves", "demand curve", "revenue and proft".

3. Students will demonstrate their understanding through composing notes on the subject

**Procedures:**

Inform the students that this class will be very different than most "math" classes: we will be talking about economics, the math of money. Inform them that they will be expected to pay close attention in class and ask any questions that might occur to them, because they will have to type up notes on this topic tonight for homework. These notes will be turned in tomorrow and revised, and they will figure as part of the required content in their portfolio (see checklist and rubric).

The teacher will then give a small lecture that defines and explains the following topics:

- Economics -- the study of resources and how they are allocated.
- Products -- what a business produces
- Supply -- the amount of a product available on the market.
- Supply curve -- the notion that as supply goes up, price goes down. Explain this using theoretical examples (i.e. water on a desert island -- if only one person is selling it, they can charge what they want; if several people are selling it, the price goes down). Demonstrate how this can be graphed as a simple linear function with a positive slope, where the number of people willing to supply goes up as price goes up (example: the number of oil drillers when oil was $100 a barrel vs. when it's $50).

- Demand -- how many people desire a particular product
- Demand curve -- the notion that as demand goes up, price goes up. Use theoretical examples (i.e. water on a desert island -- everyone wants it, if there's only one source, they'll pay more -- vs. math textbooks -- few people want them, the price goes down).
- Demonstrate how a demand curve can be represented as a line with negative slope if the price of the product is the given,
*and the dependent variable is the number of people demanding the product.*(That is, as the price of XBoxes goes up, the number of people willing to buy them goes down.)

- Costs -- what a business pays to bring a product to market
- Fixed Cost -- the costs that the business pays regardless of how much it produces (e.g. rent, advertising, etc.)
- Variable Cost -- the costs that the business pays that change as the number of units change (e.g. salaries, utilities, price of raw materials, etc.). This cost should be represented as a cost per unit produced (e.g. it costs us $0.13 for every cookie we bake -- for the ingredients, electricity, time, etc.)
- Total Cost = Fixed Cost + (Variable Cost x Number of Units Sold)

- Revenue -- the money a business takes in. This is simply the product of the number sold and the price (charged).
- Revenue = Price x Number

- Profit -- the difference between cost and revenue. This is how much money you actually
*make*.- Profit = Revenue - Total Cost

**Assessment:**

Students will type up their notes from the class period and turn them in during the following class. The teacher should review these notes, and students should revise and correct them, and then place the final draft in their portfolios.