Students will need to understand all of the above in a wider context, so
it is advisable to use other texts and possibly workbooks as reinforcement.
This unit contains a practice test, but will be externally examined.
Teachers will need to create their own
assessment schedule. See links under reference section.
Some of the following lessons require money to be spent on
cola and chocolate - teachers are advised to consult with their budget
co-ordinator if they wish the school to fund these purchases.
Students will need to study all of the economic concepts in this unit
in a wider context than that given here. Where specific homework
is not listed after a lesson it is assumed that students
will study the content of the lesson in a wider context, using a range
of texts and study guides available.
- The "Forrest Gump" Lesson:
Designed as an introduction to the whole subject.
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Choice, opportunity cost: Students will understand
that individuals and households make economic decisions by
explaining the concept of choice. All economic decisions have
an opportunity cost.
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Explain how in the movie Forrest says that life is like a box of
chocolates - you never know what you're going to get. Here the box
of chocolates illustrates the basic economic concepts: Scarcity: There
aren't enough for us to have all we want; Choice: We have to choose the
best chocolate for us. Opportunity cost: We miss out on the next
best chocolate.
- Show students your box of chocolates; explain how they will
each get to eat ONE - that you have limited means, ie. you don't have the
money to buy more or the time to make them yourself (or the time to work
more so you can afford more!)
- Get students to choose their favourite type of chocolate - perhaps
make copy masters of Roses and Cadbury milk tray to
project or make OHTs.
- Rank students in order - ensure students know they are, for
example, sixteenth out of thirty students. You may wish to get students to
pick a number from 1 to 100 and the closest to the number you have
secretly written down gets first choice and then rank in order
around the room from them.
- Give out the chocolates to students, ensuring they have time to
pick their favourite if it is left.
- Work through the worksheet (there is the slight complication that
if students didn't get their favourite chocolate, they will need to
consider what the opportunity cost was -
it still makes sense but may require some additional
explanation). Check the answer
sheet.
Summary:
Refer to the Summary worksheet,
including visual representation. See
suggested solutions sheet.
- The "Limited means" Lesson:
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Limited means: Students will comprehend the conflict
of limited means relative to wants and see the
relationship between limited means and the need to make decisions.
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Students complete pre-survey sheet. It is very simple and introduces the
difference between individuals and households. Students
complete 'Individual want' and the teacher adds all results to get 'Class
want.' This introduces the concept of market demand.
Investigation into the need to make decisions:
Method: Blind taste test:
- Explain that they have limited means and cannot afford to buy
all students as much soft drink as they would like.
- Choose perhaps 3 students for blind taste test. Students attempt
to identify the 3 colas.
(My experiments with this have resulted in
people clearly knowing which is Coke, but having trouble
separating the Pepsi from the House Brands.)
Key Questions
Available to print from
OHT copy master.
Class discussion:
- Does the blind taste test affect anyone's decisions about which
cola they prefer?
- Why can we not have all the cola we want?
- Which is your favourite cola?
- If you could only afford to buy one drink,
what would the opportunity cost of that decision be?
Homework: Students complete household wants data collection exercise.
- "Limited means" part II:
From Homework, students manipulate data:
- Students make column graphs
of individual, class and household wants for Coke, Pepsi and Other cola.
- Students calculate average demand for household wants
of Coke, Pepsi and other cola. Given that there are 1,276,000 households
in New Zealand (rounded from the 1996 Census) how
much Coke, Pepsi and other cola do New Zealanders want per week?
- Students write their own conclusions from the data; compare these and discuss as a class.
Conclusion: From this it should be fairly obvious that our wants
exceed our means and we need to make decisions!
- The "Values" lesson:
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Values and decision making: students will be able to recognise
that various individuals and groups bring differing values to consumer
decision making.
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NB: this unit of work does NOT cover Achievement Standard 1.6:
Consumer decision making. Teachers may wish to do that standard early
in the term as it is closely linked to this section of standard 1.1.
- The "Factors that influence demand":
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Influences that affect demand for goods and services: Students will be
able to describe the influences that affect the demand for goods and
services.
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NB: This lesson links closely to later lessons; you may wish to teach the lessons in a different order to that suggested here.
Opening discussion: Students come up with a definition of demand, eg.
"Demand is
how much you are willing and able to spend at each price. Market demand is how much
consumers want and can afford at each price".
Investigation: Demand is based on two factors; the first is what
we want. This follows the law of diminishing marginal utility, ie. as we
consume more of a good or service at one time the extra pleasure we
will get from extra units of consumption declines.
NB This investigation includes Year 13 content, but it is fun to teach and
helps student understanding of demand.
This is quite complex, but easy to prove.
The diminishing marginal utility experiment
Suggested approach:
- Introduce the terminology:
- Diminishing = getting smaller
- Marginal = the last one (or extra bit, as in the margin of a piece
of paper)
- Utility = a measure of satisfaction or enjoyment. Economists
invented 'Utils' as a measure of satisfaction or enjoyment to help compare
the value that people place on things.
Therefore there is a law that suggests that as we consume more
of something the satisfaction we get from extra units of consumption
gets smaller.
- Select a volunteer
- The volunteer comes to the front of the class and consumes as much
of a product as they want; this experiment works very well with sweet,
rich things like snack-sized Moro bars, but will also work with small cups
of soft drink, which is cheaper.
Other effective foods include coconut ice and bananas!
The food or drink consumed should
be something the student likes.
- The student consuming then ranks each unit consumed on a scale
of zero to ten, where ten is 'That is the most satisfaction I could
hope for from consuming that' and zero is 'I got so little satisfaction
from that I don't want any more.' Your experiment should therefore end
with a zero result.
As the student rates each unit of consumption, write their results
on the board - without limiting them too much, you should expect them to
start fairly high and at some stage decline.
This experiment will take some time, but is worth it if you use the time
to reinforce technical terminology and focus the class on the theory of
what is going on constantly, getting them to predict what is going to
happen, etc.
You can point out that appetites and tastes differ and there
is nothing wrong with that, but in almost all cases, the law
of Diminishing Marginal Utility holds.
Homework: Students use the
copy master
to summarise the results and graph the utility.
- The "Individual demand" lesson:
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Drawing an individual's demand curve: Students will be able to draw a
demand curve for an individual consumer from given data.
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Introduction: Revise what happened yesterday. Check Homework. Revise
definition of demand.
Demand also consists of what we can afford.
- Issue the Demand Worksheet or use it as an OHT
master to complete in class on a whiteboard. This shows the relationship
between price and what we can afford.
Demand is a combination of these two ideas - students must
be careful how they express this.
- We now combine the Law of Diminishing Marginal Utility
with the Consumption Possibility (Demand) curve;
be aware that the Law of diminishing marginal utility is beyond what most
students will be expected to cope with in an exam - it is a year
13 concept and is listed here to help those few students who hope
to achieve 'excellence' grades.
Note that the consumption possibility curve is on the same axes
as a (Supply and) Demand graph.
Diminishing Marginal Utility and the Consumption Possibility curve
together explain the shape of a demand curve.
Note that demand curves follow the Law of Demand.
- The "Market demand" Lesson:
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Explaining market demand: Students will be able to explain that market
demand is the sum of individual demand schedules. Students will be able to
draw a market demand curve.
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Explain that market demand is the demand for a good or service by everyone
who is willing and able to buy it.
This is calculated by the horizontal addition of all individual demand
curves, ie. at each price the quantity demanded from each individual
consumer of the product is added up.
This sounds quite confusing, but by working through the
OHT copy
master and then getting students to complete the
worksheet themselves, it
is quite straightforward.
The more students can practise this in a range of contexts, the better.
Homework: Students complete the
research exercise on variations in
income and price and how that affects individual and household demand.
- The "Changes in demand and quantity demanded" lesson:
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Movements along the demand curve: Students will be able to explain and
illustrate a movement along the demand curve.
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Work through
OHT copymaster on whiteboard, then issue
student exercise.
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Shifts of the demand curve: Students will be able to identify the
causes and evaluate the implications of a shift of a market demand curve.
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Refer to the following website:
Cola Century. Students read and
answer the following question:
- What factors have influenced how much Coke and Pepsi has been
sold since they were first invented over 100 years ago?
Homework: Students complete
'Research exercise' sheet. Students should
also complete exercises involving changes in quantity demanded in a range
of different contexts from regular text books or study guides.
- The "Factors affecting demand" lesson:
Introduction: Use the OHT copymaster of Coke and Pepsi's Mission
Statements to discuss things that will affect the demand for their
products - it is clear, for example, that Coke is the market leader and
less likely to compete on price - they must be pro-active in finding ways
to boost demand for their product.
Factors that change demand. Students copy from
OHT copymaster.
Students use the research they did on variations in price and income
to sketch graphs that show:
- Change in price of a substitute.
- Change in income.
Students read and compete task sheet on how Coke and Pepsi have been
substitutes through the years.
- The "more factors affecting demand" Lesson:
Use the three worksheets to examine changes in demand due to
Advertising/fashions and tastes,
seasonal change (linked to lack
of population during off-peak demand for goods) and
seasonal variation 2.
- The "income and spending" lesson:
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Aggregate patterns of household spending: Students will be able to
identify the relationships between household
income and consumption patterns.
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Use the OHT copymaster to explain the difference between inferior,
basic/necessary goods, luxury/premium goods and savings.
Classify Coke, Pepsi and House-brand drinks as inferior, necessary or
luxury goods. Use the results of the research exercise to confirm or
deny whether your class classifies the goods as such; if Coke is a
necessity, there will not be a significant increase in demand for it
as income rises!
Print off and ideally laminate the
Products cards, which groups of
students first classify as Inferior, Necessity, Luxury and savings. As
an extension, students could try to put the products in order from 'Most
inferior' to 'Most Luxurious' (with savings above that, of course.)
Select and adapt these learning activities to best meet the needs of your
students, and to fit the time available: