Inquiry Lesson Economics Part 1

Ready for some trade? Your team will be given a box of trading cubes that can be used to purchase items. Choose from 1 to 10 cubes each to make your purchases.

Now I will tell you the value of each color cube…. Teacher create a value for each cube.

I have a lollipop to sell. In order to make an easy “A” in this class, I will sell this lollipop to the highest bidder. I only have ONE of these to sell. Bidding will start at “10.”

Oops… I just happen to have a few more of these items. I will start the bidding at “1” until I have these sold.

Discussion Supply vs. Demand Highest Bidder First Round - Why were you motivated to pay such a high price? How did you feel when you found out, after your purchase, that there were more? How do we define supply and demand in this situation?

Inquiry Lesson Part Two

Now.. I’m going to pass each of you two index cards. Choose two school supplies that you have at your desk to secretly price on these cards. Don’t get the supplies yet. Secretly put your price on the card so you can display it by your two items. When I say “go,” get out your items and place them by the appropriate price tag.

Let’s go “window shopping” and check out the prices….

Discussion What did you notice about prices and items? Are there certain items that are scarce in comparison to others? Which items are in low supply? How might this affect what you are willing to pay? Now that you know what other merchants are selling and their prices, how might this affect your pricing of the same items?

Sticky Note Check: Get a sticky note. Put your name on it. Write what you have learned so far from this lesson. Post your note. Before we go on…...

Inquiry Lesson Economics Part Three

In 1958, Wham-O, Inc. began marketing the Hula Hoop in the United States. Sales of the Hula Hoops skyrocketed during the year, in the first months over 25 million were sold, within the year over 100 million. Watch this video and be ready to share out what happened.

Questions Discuss with your group what happened in the video Formulate a definition for “demand of a product.” Why does a business owner lower the price of products that are not selling quickly? Is this a smart market strategy? When would a business owner have the incentive to raise prices? Is this a smart market strategy? What does a higher price than before for a good or service communicate to consumers about the demand for that product?

Now, let’s fast forward to 2010…...Silly Bandz Brainchild Products, the makers of Silly Bandz are experiencing a large increase in demand for their products similar to that of Hula Hoops in 1958. The rise in demand for Silly Bandz, however, has resulted in something slightly different from the hula hoops. See if you can spot the big difference…..

Questions Discuss with your group what the seller did DIFFERENTLY in his market strategy with silly bandz when demand got high as compared to the seller of the Hula Hoops. Formulate a definition for “supply of a product.” How did the supply meet the demand for Silly Bandz? How did the supply meet the demand for Hula Hoops? What information was being communicated to the business owner by the $5 price of Silly Bandz? What did the business owner do to ensure that the Silly Bandz were allocated to those customers which valued them most?

Ticket Out….. Get an index card and write your name. Explain the “take away knowledge” you have gained through these lessons. Include your new knowledge of Supply and demand Market strategies Consumer choices Seller choices Increases, decreases and change Resources create conflict, compromise and negotiation Resources can impact quality of life

Take-away Knowledge… Debriefing The Hula Hoop industry and the Crazy Bandz industry show us how changes in demand for consumer products can shift tremendously over short time periods. The video clip with Hula Hoops provides an example of how prices are changed in response to demand. Prices will rise or fall based on the supply and demand for goods or services. The change in demand for Hula Hoops initially decreased the price due to a lack of demand. Then, with when demand skyrocketed for Hula Hoops this led to a large increase in the price level, as consumers who wanted to buy a Hula Hoop were willing and able to pay more for the toy. In the case of Silly Bandz, there was a similar rise in demand for the product. However, the price level for Silly Bandz did NOT rise. Producers of Silly Bandz were sensitive to the idea of raising the price for their product - part of their marketing strategy was that their toy was a cheap alternative to video games and other children's toys that are more expensive. Given their unwillingness to raise prices and the continued excess demand, this demand could only be met by increasing the supply.