Demand & Supply activity

TOPIC: Demand and Supply

Strategy: Discovery

Grades: 10 and 11

Demand and supply is one of the most basic topics examined in Economics. Demand and supply is an everyday activity and utilizing a market situation in the classroom where students engage in the buying and selling of goods will allow for better understanding as they will be able to relate. With the use of this discovery method students will be able to comprehend the basic concepts underlying this topic.

In the classroom goods of a similar nature will be sold by students selected to operate as suppliers. Suppliers will be given goods just of each kind equal to the number of consumer in the class so that all consumers will be able to purchase one of each item. Each supplier will however have goods sold at different prices (students will explain why goods were sold at higher prices during the discussion part of the lesson).

Some students will also be consumers, purchasing goods from suppliers, with the money provided from the game monopoly. All consumers will note that they have to purchase one of each good sold.  Students will evidently demand the goods from the cheapest supplier, as the law of demand states that when the price of a good is low consumers will demand the good. This will eventually create shortages in the market, which is manifested when demand is greater than the supply as all students will buy from the low priced supply in order that extra money will be left.

For the other suppliers with higher prices, surpluses will exist on the market, which is evident when supply is greater than demand because prices are higher, as the law of demand states that when prices are high demand is low. As a result of the high prices demand will be lower for these suppliers and so they will have to eventually lower their prices in order for all goods to be sold. Prices will be lowered down to the market clearing price which is the equilibrium price: the price where all goods in the market that is supplied will be demanded and therefore supply is equal to demand.

After the buying and selling process, students and teacher will highlight the various activities in a discussion forum and terms will be attached to each to ensure that students fully understand. Students will each be given a copy of the main questions to be asked for the discussion.

Students will form a demand and supply schedule for the goods by noting the prices of the good and the amount demanded and supplied. Students will plot the points and so draw the demand and supply curves. Special attention will be drawn towards both the law of supply and demand so that students will learn that the demand curve is downward sloping because of the law of demand and the supply curve is upward sloping because of the law of supply.

Definition of key concepts:

Demand - the willingness and ability of individuals to purchase a good at a given period of time.

Supply – the willingness and ability of producers to put goods on the market at a given price over a given period of time.

Equilibrium –where the demand on the market is equal to the demand. It is also called the market clearing point because all the goods that are put on the market are purchased at that price.

Shortages – created when the demand for the good is higher than supply and this occurs when the price of the good is low (below equilibrium price).

Surpluses – are created when the supply for the good is below the demand because prices are relatively high (above equilibrium).

Law of demand – states that when the price of the good is high, demand is low and when the price of the good is low demand is high.

Law of supply – states that when the price of the good is high supply is high and when the price of the good is low supply is low.