9.1 What Affects Price?
Entrepreneurship
Marketing
Lesson Plan
Performance Objective
Upon completion of this lesson, students will explain how price is influenced by the law of supply and demand,
production costs, and market structures.
Specific Objective
• Students will explain how supply and demand interact to determine price.
• Students will describe how costs of doing business affect the price of a good or service.
• Students will explain the effect of different market structures on price.
Terms
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Supply – how much of a good or service a producer is willing to produce at different prices
Demand – individual’s need or desire for a product or service at a given price
Equilibrium price and quantity – the point at which the supply and demand curves meet
Fixed costs – costs that must be paid regardless of how much of a good or service is produced
Variable costs – costs that go up and down depending on the quantity of the good or service produced
Marginal benefit – measures the advantages of producing one additional unit of a good or service
Marginal cost – measures the disadvantages of producing one additional unit of a good or service
Time
This lesson should take one day to complete.
Preparation
TEKS Correlations:
This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result
in the elimination of any or all of the TEKS listed.
Interdisciplinary Correlations:
130.344(c)(11)(A)
…develop and analyze pricing objectives;
130.344(c)(11)(B)
…compare and contrast pricing policies for an entrepreneurial venture;
130.344(c)(11)(C)
…recommend appropriate pricing strategies.
130.344(c)(13)(A)
…communicate the differences among pricing structures for goods, services, and ideas;
Copyright © Texas Education Agency, 2013. All rights reserved.
1
130.344(c)(13)(B)
…develop a pricing structure for an entrepreneurial venture.
English
110.42(b)(6)(A) – Vocabulary Development
…expand vocabulary through wide reading, listening, and discussing
110.42(b)(6)(B) – Vocabulary Development
… rely on context to determine meanings of words and phrases such as figurative
language, idioms, multiple meaning words, and technical vocabulary
110.42(b)(7)(F) – Reading/comprehension
…identify main ideas and their supporting details
110.42(b)(7)(G) – Reading/comprehension
…summarize texts
110.42(b)(7)(J) – Reading/comprehension
…read silently with comprehension for a sustained period of time
Occupational Correlation (O*Net – www.onetonline.org/):
Job Title: General and Operations Manager
O*Net Number: 11.1021.00
Reported Job Titles: Operations Manager, General Manager (GM), Director of Operations, Plant Manager,
Store Manager, Facilities Manager, Plant Superintendent, Vice President of Operations, Warehouse Manager,
Chief Operating Officer (COO)
Tasks:
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Oversee activities directly related to making products or providing services.
Direct and coordinate activities of businesses or departments concerned with the production, pricing,
sales, or distribution of products.
Review financial statements, sales and activity reports, and other performance data to measure
productivity and goal achievement and to determine areas needing cost reduction and program
improvement.
Manage staff, preparing work schedules and assigning specific duties.
Direct and coordinate organization's financial and budget activities to fund operations, maximize
investments, and increase efficiency.
Establish and implement departmental policies, goals, objectives, and procedures, conferring with
board members, organization officials, and staff members as necessary.
Determine staffing requirements, and interview, hire and train new employees, or oversee those
personnel processes.
Plan and direct activities such as sales promotions, coordinating with other department heads as
required.
Determine goods and services to be sold, and set prices and credit terms, based on forecasts of
customer demand.
Locate, select, and procure merchandise for resale, representing management in purchase
negotiations.
Copyright © Texas Education Agency, 2013. All rights reserved.
2
Soft Skills: Monitoring, Coordination, Social Perceptiveness, Active Learning, Judgment and Decision Making
Accommodations for Learning Differences
It is important that lessons accommodate the needs of every learner. These lessons may be modified to
accommodate students with learning differences by referring to the files found on the Special Populations
page of this website.
Preparation
• Review and familiarize yourself with the terminology and resources
• Prepare materials and websites prior to the start of the lesson
References
• Greene, C. L. (2008). Entrepreneurship ideas in action (4th ed). Mason, OH: Southwestern Cengage.
• Kourilsky, M. (1999). Making a job: A basic guide to entrepreneurship readiness. Kansas City, MO:
Kauffman Foundation for Entrepreneurial Leadership.
• Newspapers and Internet
Instructional Aids
• “What Affects Price?” Digital Presentation
• Results of Business Competition in a Small Community Assignment #1
• Wal-Mart Comes to Town Assignment #2
• International Issues Persuasive Report Assignment #3
• Results of Business Competition in a Small Community Rubric
• Wal-Mart Comes to Town Rubric
• International Issues Persuasive Rubric
• What Affects Price? Assignment Sheet
• Internet
Materials Needed
• Construction paper
• Scissors and glue
• Poster board
Equipment Needed
• Computers for students to complete projects
• Projector for digital presentation
Introduction
Learner Preparation
• Ask students to write examples of products and services that have experienced great price increases in
the past two years. Then ask students what factors contributed to the rising prices.
Copyright © Texas Education Agency, 2013. All rights reserved.
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Ask students to give examples of products and services in high demand. Then ask students how prices
are determined for highly demanded products and services.
Explain to students how monopolies work then ask students why the U.S. government is against
monopolies.
Lesson Introduction
• Play SPUD to learn new terms. Split the class into seven teams. One member from the team draws a
new term from the list in this lesson. The team member pronounces the term. A second team member
spells the word or phrase. A third team member defines the term or phrase and the fourth team
member uses the term in a sentence demonstrating that they know the definition of the term.
• Ask students to give an example of when the shopping mall was crowded and busy. Then ask students
when the mall is not very busy (weekday). Explain to students that businesses must still pay for
employees, rent, and utilities even on the days when very few customers come through the doors.
• Ask students to list their favorite foods at a college or professional sporting event. Then ask students
how much they are willing to pay for the food once they are in the stadium or arena. Discuss how
demand and distribution are major factors that contribute to increased food prices at sporting events.
Outline
MI
Outline
I. Supply and Demand
A. Supply – How much of a good or
service a producer is willing to
produce at different prices
1. When prices rise, producers are
willing to supply more
2. Lower prices result in less desire
to supply
B. Demand – An individual’s need or
desire for a product or service at a
given price
1. Demand Elasticity – when the
demand of a product is affected
by its price
2. Elastic Demand – when a change
in price creates a change in
demand
3. Inelastic Demand – when a
change in price creates very little
change in demand
a. No acceptable substitutes for a
product that consumers need
Instructor Notes
Ask students to give examples of
products consumers continue
buying even when prices
continue rising. Is this an
example of inelastic or elastic
demand?
Copyright © Texas Education Agency, 2013. All rights reserved.
4
b. Change in price is small in
relation to the income of the
consumer, so consumers will
continue to buy the product
if they want it
c. Product is a basic need for
consumers, rather than just a
want
C. When Supply and Demand curves
meet – Equilibrium Price and
Quantity
II. Costs of Doing Business
A. Fixed Costs – Costs that must be paid
no matter how much of a good or
service is produced
B. Variable Costs – Costs that go up and
down depending on the quantity of
the good or service produced
C. Marginal Benefit and Marginal Cost
1. Marginal Benefit – measures the
advantages of producing one
additional unit of a good or
service
2. Marginal Cost – measures the
disadvantages of producing one
additional unit of a good or
service
III. Market Structure and Prices
A. Perfect Competition – Consists of a
very large number of businesses
producing nearly identical products;
has many buyers
B. Monopolistic Competition – Large
number of independent businesses
that produce goods and services
that are somewhat different
C. Oligopoly – When a market is
dominated by a small number of
businesses that gain the majority of
total sales revenue
D. Monopoly – There is only one
provider of a product or service
Fresh, baked cookies are sold by
your DECA chapter on Tuesdays
in the cafeteria. You have raised
the prices from $1 to $1.50 and
students still purchase the same
quantity. What type of demand
is represented by this trend?
Ask students to give three
examples of fixed costs for
businesses. Examples may
include rent, utilities, and
employee wages.
Then ask students to give
examples of variable costs.
Examples may include
advertising, inventory, and
cleaning services for the store.
Ask students the marginal
benefit of purchasing a soda that
costs $1.
Ask students to give examples of
perfect competition,
monopolistic competition,
oligopoly, and monopoly.
Examples for each category may
include farmers market for
perfect competition, restaurants
for monopolistic competition,
Internet providers for oligopoly,
and water companies for
monopoly.
Explain how small communities
sometimes have fewer
competing businesses, which
sometimes results in higher
prices. A monopoly may exist
when there is only one grocery
store in the community.
Copyright © Texas Education Agency, 2013. All rights reserved.
5
Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
Visual/Spatial
Application
Guided Practice
Using the digital presentation, the instructor will explain how prices are determined. Basic economic concepts
and costs of doing business will be related to the final price charged for goods and services. Students will learn
the difference between perfect competition, monopolistic competition, oligopoly, and monopoly.
Independent Practice
• Results of Business Competition in a Small Community Assignment
Many small communities only have one grocery store. Some of these small communities now also have
a convenience store associated with a service station. The convenience store carries a limited number
of grocery items for very high prices. Students must explain to the class how the community changes
dramatically when a large supermarket comes to town. The monopoly or oligopoly business
atmosphere drastically changes when a major corporation that has huge buying power can offer a wide
range of items for very reasonable prices. Ask students to research a large supermarket company and
to prepare a report about the company’s commitment to the community and changes that take place
when large supermarkets come to town.
•
Large Supermarket Retailer Comes to Town Assignment
Ask students to make an oral presentation for a large supermarket retailer to the class. The
presentation must convince students that allowing the retail giant into the community is good for
consumers and the community. The presentation must also address how Wal-Mart’s presence in the
community affects local small businesses. Students’ presentations must include an introduction, body,
and conclusion.
•
International Issues Persuasive Presentation Assignment
International business in the United States involves some controversial issues. Illegal immigrants make
up a sizable portion of the workforce for construction, food processing, and agricultural businesses.
Businesses that hire illegal immigrants save large sums of money because they can pay lower wages
and skip fringe benefits. These employers are breaking the law when they hire illegalworkers. Ask
students to research the struggles facing an open border between U.S. and Mexico and prepare a
paper that defines the major issues, supports their position on the issues, and explains how their
actions may affect the U.S. economy. This project will be evaluated using the related rubric.
Summary
Review
Q: What effect do supply and demand have on the price of a good or service?
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A: High supply with low demand equals low price; high demand with low supply equals high price.
Q: How do the costs of operating a business affect prices?
A: Costs of doing business are reflected in the prices charged since businesses must charge more than their
costs in order to make a profit.
Q: How does the market structure affect the price of a good or service?
A: Market structures with a greater amount of competition tend to have lower prices.
Q: When does oligopoly occur?
A: Oligopoly occurs when the market is dominated by a small number of businesses that gain the majority of
total sales revenue.
Name that Competition
Group students into teams of two. Each team writes four scenarios that represent perfect competition,
monopolistic competition, oligopoly, and monopoly. The scenarios will be read in class and students must
decide what type of competition is being described.
Evaluation
Informal Assessment
• Instructor will observe students during Independent Practice.
• Instructor will assist students as needed.
Formal Assessment
Use the assigned rubrics to evaluate the three Independent Practice Assignments.
Enrichment
Extension
• Students analyze the current banking industry to write a paper about bank acquisitions by one or two
large competing banks in the United States. Students must explain why the bank acquisitions are taking
place and why it is important not to have only a handful of banks owning all of the financial institutions
in the United States. Students will present their information to the class.
•
Students will define the type of competition in the school cafeteria. Part of the assignment requires
students to propose competition changes for the cafeteria to provide better products and services to
students and staff.
Copyright © Texas Education Agency, 2013. All rights reserved.
7
9.1 What Affects Price?
Entrepreneurship
Marketing
Independent Practice Assignment Sheet
#1 Results of Business Competition in a Small Community Assignment
Many small communities only have one grocery store. Some of these small communities now also have a
convenience store associated with a service station. The convenience store carries a limited number of grocery
items for very high prices. Students must explain to the class how the community changes dramatically when a
large supermarket comes to town. The monopoly or oligopoly business atmosphere drastically changes when
a major corporation that has huge buying power can offer a wide range of items for very reasonable prices.
Ask students to research a large supermarket company and to prepare a report about the company’s
commitment to the community and changes that take place when large super markets come to town.
#2 Large Supermarket Retailer Comes to Town Assignment
Ask students to make an oral presentation for a large super market retailer to the class. The presentation must
convince students that allowing the retail giant into the community is good for consumers and the community.
The presentation must also address how large super market’s presence in the community affects local small
businesses. Student’s presentations must include an introduction, body, and conclusion.
#3 International Issues Written Persuasive Report Assignment
International business in the United States involves some controversial issues. Illegal immigrants make up a
sizable portion of the workforce for construction, food processing, and agricultural businesses. Businesses that
hire illegal immigrants save large sums of money because they can pay lower wages and skip fringe benefits.
These employers are breaking the law when they hire illegal residents. Ask students to research the struggles
facing an open border between U.S. and Mexico and prepare a paper that defines the major issues, supports
their position on the issues, and explains how their actions may affect the U.S. economy. This project will be
evaluated using the related rubric.
Copyright © Texas Education Agency, 2013. All rights reserved.
8
9.1 What Affects Price?
Entrepreneurship
Marketing
Assignment #1
Results of Business Competition Rubric
CATEGORY
Organization
Amount of
Information
Quality of
Information
Sources
Paragraph
Construction
20
Information is very
organized with wellconstructed
paragraphs and
subheadings.
All topics are
addressed and all
questions answered
with at least two
sentences about
each.
Information clearly
relates to the main
topic. It includes
several supporting
details and/or
examples.
All sources
(information and
graphics) are
accurately
documented in the
desired format.
All paragraphs include
introductory
sentence,
explanations or
details, and
concluding sentence.
15
10
5 or less
Information is
organized with wellconstructed
paragraphs.
Information is
organized, but
paragraphs are not
well-constructed.
The information
appears to be
disorganized.
All topics are
addressed and most
questions answered
with at least two
sentences about
each.
Information clearly
relates to the main
topic. It provides one
to two supporting
details and/or
examples.
All sources
(information and
graphics) are
accurately
documented, but a
few are not in the
desired format.
Most paragraphs
include introductory
sentence,
explanations or
details, and
concluding sentence.
All topics are
addressed, and most
questions answered
with one sentence
about each.
One or more topics
were not addressed.
Information clearly
relates to the main
topic. No details
and/or examples are
given.
Information has little
or nothing to do with
the main topic.
All sources
(information and
graphics) are
accurately
documented but
many are not in the
desired format.
Paragraphs included
related information
but were typically not
constructed well.
Some sources are not
accurately
documented.
Total Score ________
Maximum 100 Points
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9
Paragraphing
structure was not
clear and sentences
were not typically
related within the
paragraphs.
9.1 What Affects Price?
Entrepreneurship
Marketing
Assignment #2
Large Supermarket Rubric
CATEGORY
Comprehension
Preparedness
Enthusiasm
Content
Speaks Clearly
20
15
10
5 or less
Student is able to
accurately answer
almost all questions
posed by classmates
about the topic.
Student is completely
prepared and has
obviously rehearsed.
Student is able to
accurately answer a
few questions posed
by classmates about
the topic.
The student is
somewhat prepared,
but it is clear that
rehearsal was
lacking.
Facial expressions
and body language
are used to try to
generate enthusiasm
but seem somewhat
faked.
Shows a good
understanding of
parts of the topic.
Student is unable to
accurately answer
questions posed by
classmates about the
topic.
Student does not
seem at all prepared
to present.
Facial expressions
and body language
generate a strong
interest and
enthusiasm about
the topic in others.
Shows a full
understanding of the
topic.
Student is able to
accurately answer
most questions
posed by classmates
about the topic.
Student seems pretty
prepared but might
have needed a
couple more
rehearsals.
Facial expressions
and body language
sometimes generate
a strong interest and
enthusiasm about
the topic in others.
Shows a good
understanding of the
topic.
Speaks clearly and
distinctly all (10095%) the time, and
mispronounces no
words.
Speaks clearly and
distinctly all (10095%) the time, but
mispronounces one
word.
Speaks clearly and
distinctly most (9485%) of the time.
Mispronounces no
more than one word.
Often mumbles or
cannot be
understood OR
mispronounces more
than one word.
Total Score ________
Maximum 100 Points
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10
Very little use of
facial expressions or
body language. Did
not generate much
interest in the topic
being presented.
Does not seem to
understand the topic
very well.
9.1 What Affects Price?
Entrepreneurship
Marketing
Assignment #3
International Issues Rubric
CATEGORY
Attention
Grabber
Position
Statement
Support for
Position
Evidence and
Examples
Closing
paragraph
20
15
10
5 or less
The introductory paragraph
has a strong hook or
attention grabber that is
appropriate for the audience.
This could be a strong
statement, a relevant
quotation, statistic, or
question addressed to the
reader.
The position statement
provides a clear, strong
statement of the author's
position on the topic.
Includes three or more pieces
of evidence (facts, statistics,
examples, real-life
experiences) that support the
position statement. The
writer anticipates the
reader's concerns, biases, or
arguments and has provided
at least one counterargument.
All of the evidence and
examples are specific and
relevant, and explanations
are given that show how each
piece of evidence supports
the author's position.
The introductory
paragraph has a hook or
attention grabber, but it is
weak, rambling or
inappropriate for the
audience.
The author has an interesting
introductory paragraph, but
the connection to the topic is
not clear.
The introductory paragraph is
not interesting AND is not
relevant to the topic.
The position statement
provides a clear statement
of the author's position on
the topic.
Includes three or more
pieces of evidence (facts,
statistics, examples, reallife experiences) that
support the position
statement.
A position statement is
present, but does not make
the author's position clear.
There is no position
statement.
Includes two pieces of
evidence (facts, statistics,
examples, real-life
experiences) that support the
position statement.
Includes one or fewer pieces
of evidence (facts, statistics,
examples, real-life
experiences).
Most of the evidence and
examples are specific and
relevant, and explanations
are given that show how
each piece of evidence
supports the author's
position.
The conclusion is
recognizable. The author's
position is restated within
the first two sentences of
the closing paragraph.
At least one of the pieces of
evidence and examples is
relevant and has an
explanation that shows how
that piece of evidence
supports the author's
position.
The author's position is
restated within the closing
paragraph but not near the
beginning.
Evidence and examples are
NOT relevant AND/OR are not
explained.
The conclusion is strong and
leaves the reader solidly
understanding the writer's
position. Effective
restatement of the position
statement begins the closing
paragraph.
Total Score ________
Maximum 100 Points
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11
There is no conclusion - the
paper just ends.