Supply and Demand

Supply and Demand

Target Grade Level:

Grade 6 

Time:

One 60-minute lesson or two 30-minute lessons 

Purpose/Objective:

Students will understand the law of supply and demand and how it affects the cost of goods and services. Students will use the law of supply and demand to explain why the market price of crops and livestock fluctuates.

Materials:

  • Computer, internet connection, and projector to show video
  • Copies of Supply and Demand Worksheet for each group

Suggested Companion Resources (books, websites, etc.)

  • Hudsucker Proxy video: https://www.youtube.com/watch?v=uLOAXDb6fps
  • Loewen, N., & Jensen, B. (2004). Lemons and Lemonade: A Book About Supply and Demand. Minneapolis, Minn.: Picture Window Books.
  • Larson, J. (2010). Who’s Buying? Who’s Selling? Understanding Consumers and Producers. Minneapolis Lerner Publications.

Vocabulary (with definitions)

  • Supply – the amount of product or service available for people to buy
  • Demand – how much of a product or service people are willing to buy
  • Product – anything made, especially to be sold to others
  • Costamount of money paid for a good or service

Background – Agricultural Connections (what would a teacher need to know before teaching this lesson):

The teacher must understand the law of supply and demand and how this affects the price of crops and livestock.

Interest Approach or Motivator:

Show the Hudsucker Proxy video.  Ask students to describe what they saw in the video

  • What happened when no one was buying the hula-hoops? (The price went down)
  • How would you describe the supply of hula-hoops in the store before they were being bought? (High)
  • As kids starting buying hula-hoops, what happened to the supply? (It went down)
  • As kids starting buying hula-hoops and there were fewer hula-hoops available, what happened to the price of the hula-hoops? (It went up)

Procedures (outline the main points, step by step activities, and the full content to be presented to students)

  1. Introduce students to vocabulary and refer to video for examples
    • What product was being sold in the video? (hula-hoops)
    • What was the toyshop’s supply like in the beginning? (High…Many hula hoops)
    • What was the demand for hula-hoops like at this point? (Low)
    • What happened to the cost of the hula-hoops when supply was high and demand was low? (The price went down)
    • What happened to the demand for hula-hoops after the kids saw the boy doing all of his tricks with it? (Demand went up)
    • When demand for the hula-hoops went up, what happened to the supply of hula-hoops? (It went down…There were fewer hula hoops available)
    • When demand for the hula-hoops was high and the supply of hula-hoops was low, what happened to the cost of the hula-hoops? (It increased)
  2. Explain to students that supply can affect the cost of goods and service. Supply and Cost have an inverse relationship. This means when one goes up, the other goes down or when one goes down, the other goes up. When supply is high, is low…When supply is low, goes up.
  3. Explain to students that demand also affects cost, but it has a direct relationship. High demand leads to higher prices and low demand leads to lower prices.
  4. Ask students: Since most of us aren’t buying hula hoops every day, can you think of some goods or services that we buy on a regular basis where the costs may be determined by supply and/or demand? (gas, groceries, corn, soybeans, beef, pork) Use the example of the recent avian flu epidemic: the cost of eggs has recently doubled because chickens that lay eggs have died resulting in a low supply of eggs. Due to a low supply and consistent demand, the cost of eggs has increased.
  5. Divide students into groups and have them work together to complete the Supply and Demand Worksheet (see Essential Files). Give students 10 minutes to complete worksheets and then discuss answers.

Essential Files (maps, charts, pictures, or documents)

 

Extension Activities (how can students extend learning outside of the classroom? This could include assignments they do outside of class.)

Author

Amy Kloberdanz

Sources/Credits/Citations

National Agriculture Literacy Outcomes

  • Describe how supply and demand impact the price of agricultural goods (Gr. 3-5)
  • Explain how prices for agricultural goods are determined (Gr. 6-8)

Iowa Common Standards (Essential Concepts and Skills)

SS.3–5.E.1

Essential Concept and/or Skill: Understand the role of scarcity and economic trade–offs and how economic conditions impact people’s lives.

  • Understand that goods and services are scarce because there are not enough resources to satisfy all of the wants of individuals, governments, and societies.
  • Understand that consumers buy less of products and services when prices go up and buy more when prices go down.

SS.3–5.E.6  

Essential Concept and/or Skill: Understand that all economies throughout the world rely upon universal concepts. 

  • Understand that there are producers and consumers in all economies.
  • Understand supply and demand in various types of economies. 

SS.6–8.E.6

Essential Concept and/or Skill: Understand how universal economic concepts present themselves in various types of economies throughout the world.  

  • Understand how the laws of supply and demand affect price and consumers' responses to prices.
  • Understand how the change of price for one good or service can affect the price for other goods and services.