Students learn about the concepts of supply, demand, and scarcity. They then complete a questionnaire handout about these economic concepts.
This lesson is part of Great States: Idaho | Unit 9: Industry, Economy & Government which explores the interconnections of Industry, Economy, & Government. A particular emphasis will be placed on undertakings that bring all three of these forces together such as resource extraction and infrastructure development.
4.SS.3.1.2: Explain the concepts of supply and demand and scarcity.
Boise District 413.38: Explain the concepts of supply and demand and scarcity.
- Class set of Our Economy: Supply & Demand handout
Start by having a basic discussion of our economy — people get jobs to make money and they use that money to buy products or services.
Define the terms supply, demand, and scarcity. Use relatable examples to help the students understand.
Supply: How much of a product, service, or resource is available.
Demand: How many people want a product or service, and how much they are willing to pay for it.
Example: In early summer, a farmer usually grows a large supply of strawberries—enough to satisfy the townspeople’s demand—so prices are low.
Example: Sometimes, a farmer grows too many strawberries—more than what the townspeople want; supply is higher than demand, so the farmer has to lower his price to sell the strawberries. The lower price might entice more people to buy (raise demand).
Example: During winter, the farmer has only a small supply of strawberries—not enough to meet the townspeople’s demand; he can raise prices because some people will pay more to get the strawberries before they run out.
Scarcity: The idea that human wants will always exceed the finite resources available to fulfill those wants. This theory—that humans will always want more than what is available—is what causes us to make decisions or tradeoffs—essentially what makes us decide how to decide to give up what we have for what we want.
Handout the associated worksheet and break the students up into groups to complete it.
Reconvene to discuss the answers and drive home the interconnectedness of these terms.
Answers will vary. The baker will have to charge more for the baked goods to cover his or her extra cost for the eggs. As a result, demand may decrease as buyers are unwilling to pay higher prices. The baker may have to adjust by: making fewer goods, using fewer eggs, and/or lowering prices.
It could be either. Stores have sales when demand for certain items has gone down or supply becomes too high. For example, there is less demand for winter clothes in the spring, so winter clothes may be discounted. Or a trend may come to an end and the store has too much supply.
Answers will vary, but could say that supply was too low so the store raised prices on the pumpkins that survived the storm. Demand was unchanged, so customers are willing to pay higher prices.