Lesson Plan – Law of Demand and Supply
Aim of Lesson:
The aim of this lesson is to introduce the students to the topic of markets and how markets work
using the law of demand and the law of supply.
Objective of Lesson:
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To define markets
To explain what markets provide
Examine the way in which markets work
To define the law of demand
To define the law of supply
Identify what happens when demand exceeds supply
Identify what happens when supply exceeds demand
Explain how supply and demand affects choices
To illustrate how markets and the law of demand and supply operate through class
activity
Materials Used:
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Whiteboard
Overheads
Textbook
Tokens for bidding
Chocolate bars
Development 1 (lesson structure and methodology):
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Write the term ‘Markets’ on the whiteboard
Ask the students if they can define what a market is
Write their answers on the whiteboard, using a spider diagram
Using an overhead show them the economic definition as follows:
 ‘A market is a mechanism by which potential buyers of a good or service
are brought into contact with potential sellers of that good or service’.
 Explain simply that markets are where buyers and sellers meet
 Next discuss what economic questions markets provides answers to as follows:
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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1. What goods should be produced (and in what quantities)?
2. For whom are goods produced?
3. How are the goods to be produced (what combination of the factors of
production should be used)?
4. What rewards should be given to those who supply the factors of
production?
Explain to the students when you look at the above 4 points, it is obvious that a market is
a group of people rather then a particular place
Continue that while a market can be confined to a particular location e.g. the New York
Stock Exchange and the London Stock Exchange, a market may also be dispersed, as is
the market for foreign currencies which extends worldwide and is know as the Foreign
Exchange market
Ask for further examples of markets based on this example
Next ask the students if a market can be created?
Try and elicit ‘yes’ from them and ask for reasons why and how
Give an examples to them such as if a new vaccine is discovered to cure cancer – a
market now exists for that vaccine
Another example will be the design of new technology e.g. playstation 3 or The Wii
Sub-Development 1 (lesson structure and methodology)
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Next examine how markets work
Coordinate a class activity to introduce students to this
The activity will allow students personal involvement in the concept of supply and
demand which helps the students see how it relates to their everyday life
Students will be given a box of tokens with two colours in it, and asked to select any
number of them from 1 to a handful
Place a value on the tokens AFTER the students have already selected their tokens
Then present a bar of chocolate and let the students know that they will only receive a
homework free lesson if they own this selected item of which the teacher has EXACTLY
one of.
Announce the bidding to be open at 10cents and they may use their tokens to purchase
the item
Continue auction until a student has paid a high price for this item and received it
Then pull out a class supply of chocolate – the same chocolate as already bid for
Announce that actually there is more then one item and teacher is now willing to open
bids at 1 cent
Students will have a shocked reaction to this exercise
Continue to explain that they have just experienced the law of demand and supply and
explain these now in detail
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
Sub-Development 2 (lesson structure and methodology)
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Explain to the students that every market works through the interaction of supply and
demand. Explain the following points to the students
When discussing the law of demand for a good we mean the quantity consumers are will
to buy at different prices
When discussing the law of supply, we mean the quantity that producers would be
willing to make available at different prices
A market works on the principle that there is some price that satisfies both consumers and
producers. Emphasise to the student that this point is extremely important to know and
understand.
At this point ask the students if they have any questions and answer any that are posed
Examine the situation from the view of the consumer and from the view of the producer
Sub-Development 3 (lesson structure and methodology)
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First consider the consumer – the Law of Demand
Demand can be defined as follows:
 If price rises, quantity demanded falls and if price falls, quantity
demanded rises
Put these statements on the overhead projector so students can read the statements again.
Explain that the Law of Demand is very important to know as it will help us understand
how consumers operate in markets
Put an overhead on the projector illustrating the market for tea in Ireland – demonstrating
the relationship between price and quantity
This list will show the quantities that would be demanded at number of different prices.
This table is called a demand schedule
Examine this table with the class, and highlight to each student that quantity demanded
and sold will increase as price decreases
Then explain to the students that demand can also be illustrated graphically and this is
known as a demand curve
Show an overhead of the demand curve for the table previously discussed on the tea
market in Ireland.
Explain the Demand Curve to the students and instruct them to take it down in their copy
books
Sub-Development 4 (lesson structure and methodology)
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Next consider the situation from the point of the producer – Supply
Supply can be defined as follows:
 If price rises, quantity supplied rises and if price falls, quantity supplied
falls
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Put these statements on the overhead projector so students can read the statements again.
Explain that Supply is very important to know as it will help us understand how
producers operate in markets
Staying with the examples of the tea market in Ireland, we will look at the supply
schedule of tea and look at the relationship between price and quantity
Then present this information on a supply curve – the economic method in which we
view supply
As a class discuss the differences between demand and supply
Continue with explaining the term excess supply
Excess supply exists when quantity supplied is greater then quantity demanded
Producers have no option but to lower the prices
S > D = P decreases
Continue with explaining the term excess demand
Excess demand exists when quantity demanded is greater then quantity supplied
In this case consumers would compete against each other for the available supply and
price would be forced to increase
D > S = P increases
Next explain the term Equilibrium Price
This is where supply = demand. By equilibrium we mean a situation from which there is
no tendency to change
If the price on the market e.g. tea is above the equilibrium price, there will be a
downward pressure on price. Quantity supplied will exceed quantity demanded and
producers will lower their price to get rid of surplus stock
If the price on the market e.g. tea is below the equilibrium price, there will be an upward
pressure on price. Quantity demanded will exceed quantity supplied and consumers will
be competing for a limited supply of the good. Scarcity would exist and price would
increase
If no interference in the market occurs (by government of other agency), price will
eventually settle at a level where quantity demanded equals quantity supplied. This
position is called the market equilibrium
Having defined demand and supply ask the student that bought the overpriced bar of
chocolate to define what these terms mean to him in light of the experience he just had,
explain why he was motivated to pay such a high price for it, and let us know if he would
have paid so much if he had know there were enough chocolate bars to go around.
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
Lesson Plan on the topic of ‘Supply’
Aim of Lesson:
The aim of this lesson is to incorporate the information students have learned from the topic
‘supply’, into workbook, exam and life related questions. Students should confidently and
competently recognise and understand the factors that affect the supply of a good and relate it to
life examples.
Objective of Lesson:
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Recap and discuss supply curves which are exceptions to the rule of supply
Recap and discuss the 5 factors affecting the supply of a good
Comprehension of the details involved in each factor
Understanding of the shifts in supply curve – both in the negative effect and positive
effect
 Efficiently answer questions on supply that are workbook related, exam related and
related to their daily lives
 Encourage an appreciation of economics throughout the class
Materials Used:
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Whiteboard
Overheads
Textbook
PowerPoint presentation
Products: salt + pepper, potatoes + pasta, beans + peas, coffee + hot chocolate
Homework sheet
Development 1 (lesson structure and methodology):
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Ask the students to explain the basic law of supply that relates to most products, eliciting
the following: as price increases, supply increases (P increases = S increases). If price
decreases, supply also decrease (P decreases = S decreases).
Question from homework should illustrate how the law of demand operates. Correct this
question according to the law of supply.
Next examine the 3 exceptions to the rule of Supply. These exceptions are put into
practice with homework questions
Ask the students to explain the first exception to the law Supply. That exception is as
follows:
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Exception 1 = Perfect Inelastic Supply
o If the quantity supplied is fixed, so that an increase in price will not bring forth
further suppliers and a fall in price will not result in less being supplied e.g. fresh
fruit, vegetables, open-air markets
Next complete homework question in class so that this issue can be illustrated in
economic terms on a graph.
The students will be asked to explain the shape of the graph and a student will draw this
on the whiteboard
Students will then explain the answer to the questions with reference to Exception 1
Next ask the students to explain the second exception to the law of supply. This exception
is as follows:
Exception 2 = a minimum price is established below which supply will be zero
o Suppliers are able to impose a minimum price (P1). At prices below P1 nothing
will be supplied. At prices above P1 the curve will revert back to its normal
upward slope as increase in prices = increase in supply
o E.g. trade union where there is a minimum wage
Next complete homework question in class so that this issue can be illustrated in
economic terms on a graph.
The students will be asked to explain to me the shape of the graph and a student will draw
this on the whiteboard
Students will then explain the answer to the questions with reference to Exception 2
Next ask the students to explain the final exception to the law of supply. This exception is
as follows:
Exception 3 = the firm reaches its maximum output
o Depicts a situation where the firm increases output as price increases, up to its
maximum level of output Q1. Any increase in price above P1 will have no effect
on quantity supplied because the firm is operating at full capacity
Complete homework question in class so that this issue can be illustrated in economic
terms on a graph.
The students will be asked to explain to me the shape of the graph and another student
will draw this on the whiteboard
Students will then explain the answer to the questions with reference to Exception 3
Draw the diagrams again on the whiteboard as per their explanations
As the class are completing the questions ask the students to give further examples to
support these exceptions
Sub-Development 1 (lesson structure and methodology)
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The next section of the lesson will recap the factors that affect the supply of a good.
There are 5 overall factors to consider.
Ask the students to list these 5 factors
Ask the students to briefly explain each of the 5 factors clearly and with good explanation
and ask for examples to support their explanations.
The factors that affect the supply of goods are as follows:
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Supply of a good depends on its own price
o Goods which obey the law of supply
o If price rise, quantity supplied rises
o If price falls, quantity supplied falls
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Supply of a good depends on the prices of related goods
o If price of a related good rises, while the price of the good the firm is making now
remains the same or falls, it becomes attractive for the firm to supply the good
that has increased in price
o An increase in price or a related good will cause a fall in the supply of Good Y
o Consequently it will switch resources to the production of the relatively more high
priced good
o A fall in the price of a related goodwill cause an increase in the supply of Good Y
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Supply of a good depends on the cost of production
o If there is an increase in the cost of production of Good Y, there will be a
reduction in supply. This will cause the supply curve to shift to the left
o Possible causes for an increase in the cost of production are as follows:
 A rise in labour costs
 A rise in the cost of raw materials
 An increase in tax
 A reduction in subsidies
o Similarly a fall in the cost of production will cause an increase in the supply of
Good Y and will cause the supply curve to shift to the right
o Possible causes for a decrease in the cost of production are as follows:
 A fall in labour costs
 A fall in the cost of raw materials
 A reduction in tax
 An increase in subsidies
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Supply of a good depends on the state of technology
o The methods of production available to the firm. As technology advances it
improves the productivity of the firm and therefore increases supply
o The supply curve will shift to the right
o It is important to note that we do not discuss a ‘fall’ in the state of technology.
This is because we assume that any method of production available to the firm
now will always remain an option to the firm
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Supply of a good depends on the factors outside the control of the firm
o Factors that are not planned in advance by the producer
o Favourable unplanned factors
 E.g. favourable weather conditions
 Causes a shift in the supply curve to the right = increase in supply
o Unfavourable unplanned factors
 E.g. a strike
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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 Causes a shift in the supply curve to the left = decrease in supply
When students have completed listing and explaining the 5 factors affecting supply the
teacher will write the supply function on the whiteboard as follows:
Sy = f(Py, Pr, C, T, U)
Continue with the homework.
Question 4 incorporates all of the factors discussed above.
Put up an overhead of a supply curve and for each point on question 4 the students will
inform the teacher what happens to the supply curve and teacher will amend it with a
whiteboard marker as required.
Briefly recap the concept of supply using a PowerPoint presentation which will illustrate
the shifts in the supply curves from a negative and a positive perspective.
Sub-Development 2 (lesson structure and methodology)
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The final part of the lesson will involve group work and a group exercise.
Students will be split into groups of 5 (4 groups all together)
A team leader will be designated to keep the worksheet safe and complete the analysis in
writing on behalf of the team
Give each group 2 related products.
The products are as follows:
 Salt + pepper
 Pasta + Potatoes
 Beans + Peas
 Coffee + hot chocolate
With these products give them a worksheet with a certain amount of information (see
attached)
The group will be required to discuss the products and information supplied and plot their
analysis on a supply curve
As the students are undertaking this exercise, the teacher will walk around the classroom
This is to ensure teacher is available for questioning by the students and also to ensure
management of the group work and maintain discipline
If time allows discuss the analysis from each team. Otherwise begin the next lesson with
their analysis and suggestions
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
Lesson Plan - Markets
Aim of Lesson:
The aim of this lesson is to continue the topic of with the topic of markets, explaining how the
laws of demand and the law of supply apply to the various markets.
Objective of Lesson:
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To recap on the definition of markets
To discuss what markets provide
Examine the way in which markets work
To discuss the types of markets
To examine markets in operation
To recap on the definition and explanation of the law of demand
To recap on the definition and explanation of the law of supply
Examine what happens when demand exceeds supply
Examine what happens when supply exceeds demand
Explain how supply and demand affects choices
Define and discuss excess supply and excess demand
Define and discuss equilibrium price
Discuss shifts in the supply and demand curves
To illustrate how markets and the law of demand and supply operate through class
activity
Materials Used:
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Whiteboard
Overheads
Textbook
Newspaper clipping handout
PowerPoint presentation
Index price cards
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
Introduction:
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 Ask the students to take out the newspaper clipping from the previous lesson.
 This clipping was on the product Playstation 3 which was not available in Europe until
March 2007.
 A British man paid over €11,000 for an advance copy of the product. This is a great
example of demand and supply that the students can relate to.
Development 1 (lesson structure and methodology):
 Write the term ‘Markets’ on the whiteboard
 Students were asked in the workbooks to define a market, so a good definition is
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expected
Randomly choose a student to answer this question
Using an overhead support this answer using the economic definition as follows:
 ‘A market is a mechanism by which potential buyers of a good or service
are brought into contact with potential sellers of that good or service’.
Ask the students to explain simply what are markets, eliciting the point that markets are
where buyers and sellers meet
Next recap on what economic questions do markets provides answers to. Ask students
randomly to elicit the following points:
5. What goods should be produced (and in what quantities)?
6. For whom are goods produced?
7. How are the goods to be produced (what combination of the factors of
production should be used)?
8. What rewards should be given to those who supply the factors of
production?
Next ask students where one would find a market – eliciting as many examples as
possible including the following:
1. A market can be confined to a particular location e.g. the New York Stock
Exchange and the London Stock Exchange
2. A market may also be dispersed, as is the market for foreign currencies
which extends worldwide and is know as the Foreign Exchange market
Ask for further examples of markets based on this example
Next ask students for examples of markets that can be created and list these on the
whiteboard using a spider diagram
Sub-Development 1 (lesson structure and methodology)
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Ask students to close their workbooks and test books for the time being so that the class
may examine markets in greater detail
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Explain to the students that there are 3 categories of market in our economies. These are
as follows:
1. Factor Markets
2. Intermediate Markets / Producer Markets
3. Final Markets / Goods Markets
Examine each of these markets in detail individually
Factor Markets:
 A factor market is a market where a factor of production is bought and
sold
 The buyer is the entrepreneur who wants to use the factor in the
production of goods and services
 The seller is the owner of the factor of production in question
 Price is determined in the same way – this represents income to the owner
of the factor of production
 Rent = income to the owner of the land
 Wages = the reward to the supplier of labour
 Interest = the return to the owner of capital
Intermediate Markets / Producer Markets
 An intermediate market is one where output (i.e. raw material) is sold to
be used as input in the production of another good
 Example: the output of the steel industry is bought by car manufacturing
firms in the making of cars
Final Markets / Goods Markets
 Final markets are markets that deal in goods and services that give
consumers utility and for which they are therefore prepared to pay a price
 Examples: food, drink, clothing, furniture, household appliances
For each market, elicit as many examples as possible of each market and draw these on
the whiteboard
At this point ask the students if they have any questions and answer any that are posed
Sub-Development 2 (lesson structure and methodology)
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Re-explain to the students that every market works through the interaction of supply and
demand.
Ask the students what we mean when discussing the law of demand for a good eliciting
the following: ‘we mean the quantity consumers are willing to buy at different prices’
Next ask the students what we mean when discussing the law of supply, eliciting the
following: ‘we mean the quantity that producers would be willing to make available at
different prices’
A market works on the principle that there is some price that satisfies both consumers and
producers. Emphasise to the student that this point is extremely important to know and
understand.
At this point ask the students if they have any questions and answer any that are posed
Examine the situation from the view of the consumer and from the view of the producer
using different examples
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
Sub-Development 3 (lesson structure and methodology)
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First consider the consumer and recap the Law of Demand
Ask the students to define demand. Demand can be defined as follows:
 If price rises, quantity demanded falls and if price falls, quantity
demanded rises
Put this statement on the overhead projector so students can read the statements again.
Again explain to the students that the Law of Demand is very important to know as it will
help us understand how consumers operate in markets
Next consider the situation from the point of the producer and recap on the Law of
Supply
Ask the students to define supply. Supply can be defined as follows:
 If price rises, quantity supplied rises and if price falls, quantity supplied
falls
Put this statement on the overhead projector so students can read the statements again.
Explain that Supply is very important to know as it will help us understand how
producers operate in markets
Sub-Development 4 (lesson structure and methodology)
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Next recap on the Demand Schedule and Demand Curve. The teacher wants to ensure
that students understand this extremely well as it is vital for many areas of economics
Put an overhead on the projector illustrating the market for tea in Ireland – demonstrating
the relationship between price and quantity
This list will show the quantities that would be demanded at number of different prices.
Ask the students what this table is called eliciting the following: a demand schedule
Examine this table as a class, and highlight to each student that quantity demanded and
sold will increase as price decreases
Then explain to the students that demand can also be illustrated graphically. Ask the
students what this graph is called, eliciting that this is known as a demand curve
Then show an overhead of the demand curve for the table previously discussed on the tea
market in Ireland.
Explain the Demand Curve to the students and instruct them to take it down in their copy
books
Staying with the examples of the tea market in Ireland, look at the supply schedule of tea
and look at the relationship between price and quantity
Then present this information on a supply curve
Discuss as a class the differences between demand and supply
Continue with explaining the term excess supply
Excess supply exists when quantity supplied is greater then quantity demanded
Producers have no option but to lower the prices
S > D = P decreases
Next explain the term excess demand
Excess demand exists when quantity demanded is greater then quantity supplied
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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In this case consumers would compete against each other for the available supply and
price would be forced to increase
D > S = P increases
Next explain the term Equilibrium Price
This is where supply = demand. By equilibrium we mean a situation from which there is
no tendency to change
If the price on the market e.g. tea is above the equilibrium price, there will be a
downward pressure on price. Quantity supplied will exceed quantity demanded and
producers will lower their price to get rid of surplus stock
If the price on the market e.g. tea is below the equilibrium price, there will be an upward
pressure on price. Quantity demanded will exceed quantity supplied and consumers will
be competing for a limited supply of the good. Scarcity would exist and price would
increase
If no interference in the market occurs (by government of other agency), price will
eventually settle at a level where quantity demanded equals quantity supplied. This
position is called the market equilibrium
Having defined demand and supply hand the students a copy of an old newspaper article
advertising Playstation 3. The product has not yet launched on the European market and a
customer paid over €11,000 for an advance version of the product. Discuss the laws of
demand and supply in relation to this particular product
Sub-Development 5 (lesson structure and methodology)
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Next present the students with a PowerPoint presentation
This presentation will illustrate how the laws of demand and supply apply to factor
markets and to goods markets
This presentation will demand and supply in terms of equations and how they are
represented on supply and demand curves
It will also take into consideration what happens if there is a shortage in either of these
markets
Discuss the shifts in the demand curve and the shifts in the supply curve
The final part of the presentation will take into account the equilibrium price
As a product use the example of potatoes
The PowerPoint presentation will illustrate effectively the demand / supply schedules on
demand / supply curves
It will also hold the students interest as it is creative and technologically orientated which
students understand and have an interest in.
Sub-Development 6 (lesson structure and methodology)
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For the final part of class, carry out a class activity as follows:
Students will be asked to think of three items on their desks and to secretly set a price for
each one of them on the index card that will be handed out the each one.
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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They will then fold their index cards so it can stand upright on their desks
Students will then be instructed to place their items by their price list
Students will then be invited to go ‘shopping’ and check out all the prices in the ‘shop’
Lead the students into discussion asking questions such as the following:
 Now that you can see how other merchants priced their items, how will it
effect your pricing of the same item
 Were there some items that would be in high demand because of their low
supply?
 How might that effect pricing?
Students may want to stock their ‘shelves’ differently after doing some comparisonshopping and seeing the availability of certain items.
Give the students the opportunity to price another 3 items of their choice and discuss their
changes and why they were made.
Lesson Plan – Law of Demand and Supply
Aim of Lesson:
The aim of this lesson is to introduce the students to the topic of markets and how markets work
using the law of demand and the law of supply.
Objective of Lesson:
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To define markets
To explain what markets provide
Examine the way in which markets work
To define the law of demand
To define the law of supply
Identify what happens when demand exceeds supply
Identify what happens when supply exceeds demand
Explain how supply and demand affects choices
To illustrate how markets and the law of demand and supply operate through class
activity
Materials Used:
 Whiteboard
 Overheads
 Textbook
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
 Tokens for bidding
 Chocolate bars
Development 1 (lesson structure and methodology):
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Write the term ‘Markets’ on the whiteboard
Ask the students if they can define what a market is
Write their answers on the whiteboard, using a spider diagram
Using an overhead show them the economic definition as follows:
 ‘A market is a mechanism by which potential buyers of a good or service
are brought into contact with potential sellers of that good or service’.
Explain simply that markets are where buyers and sellers meet
Next discuss what economic questions markets provides answers to as follows:
9. What goods should be produced (and in what quantities)?
10. For whom are goods produced?
11. How are the goods to be produced (what combination of the factors of
production should be used)?
12. What rewards should be given to those who supply the factors of
production?
Explain to the students when you look at the above 4 points, it is obvious that a market is
a group of people rather then a particular place
Continue that while a market can be confined to a particular location e.g. the New York
Stock Exchange and the London Stock Exchange, a market may also be dispersed, as is
the market for foreign currencies which extends worldwide and is know as the Foreign
Exchange market
Ask for further examples of markets based on this example
Next ask the students if a market can be created?
Try and elicit ‘yes’ from them and ask for reasons why and how
Give an examples to them such as if a new vaccine is discovered to cure cancer – a
market now exists for that vaccine
Another example will be the design of new technology e.g. playstation 3 or The Wii
Sub-Development 1 (lesson structure and methodology)
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Next examine how markets work
Coordinate a class activity to introduce students to this
The activity will allow students personal involvement in the concept of supply and
demand which helps the students see how it relates to their everyday life
Students will be given a box of tokens with two colours in it, and asked to select any
number of them from 1 to a handful
Place a value on the tokens AFTER the students have already selected their tokens
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Then present a bar of chocolate and let the students know that they will only receive a
homework free lesson if they own this selected item of which the teacher has EXACTLY
one of.
Announce the bidding to be open at 10cents and they may use their tokens to purchase
the item
Continue auction until a student has paid a high price for this item and received it
Then pull out a class supply of chocolate – the same chocolate as already bid for
Announce that actually there is more then one item and teacher is now willing to open
bids at 1 cent
Students will have a shocked reaction to this exercise
Continue to explain that they have just experienced the law of demand and supply and
explain these now in detail
Sub-Development 2 (lesson structure and methodology)
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Explain to the students that every market works through the interaction of supply and
demand. Explain the following points to the students
When discussing the law of demand for a good we mean the quantity consumers are will
to buy at different prices
When discussing the law of supply, we mean the quantity that producers would be
willing to make available at different prices
A market works on the principle that there is some price that satisfies both consumers and
producers. Emphasise to the student that this point is extremely important to know and
understand.
At this point ask the students if they have any questions and answer any that are posed
Examine the situation from the view of the consumer and from the view of the producer
Sub-Development 3 (lesson structure and methodology)
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First consider the consumer – the Law of Demand
Demand can be defined as follows:
 If price rises, quantity demanded falls and if price falls, quantity
demanded rises
Put these statements on the overhead projector so students can read the statements again.
Explain that the Law of Demand is very important to know as it will help us understand
how consumers operate in markets
Put an overhead on the projector illustrating the market for tea in Ireland – demonstrating
the relationship between price and quantity
This list will show the quantities that would be demanded at number of different prices.
This table is called a demand schedule
Examine this table with the class, and highlight to each student that quantity demanded
and sold will increase as price decreases
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Then explain to the students that demand can also be illustrated graphically and this is
known as a demand curve
Show an overhead of the demand curve for the table previously discussed on the tea
market in Ireland.
Explain the Demand Curve to the students and instruct them to take it down in their copy
books
Sub-Development 4 (lesson structure and methodology)
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Next consider the situation from the point of the producer – Supply
Supply can be defined as follows:
 If price rises, quantity supplied rises and if price falls, quantity supplied
falls
Put these statements on the overhead projector so students can read the statements again.
Explain that Supply is very important to know as it will help us understand how
producers operate in markets
Staying with the examples of the tea market in Ireland, we will look at the supply
schedule of tea and look at the relationship between price and quantity
Then present this information on a supply curve – the economic method in which we
view supply
As a class discuss the differences between demand and supply
Continue with explaining the term excess supply
Excess supply exists when quantity supplied is greater then quantity demanded
Producers have no option but to lower the prices
S > D = P decreases
Continue with explaining the term excess demand
Excess demand exists when quantity demanded is greater then quantity supplied
In this case consumers would compete against each other for the available supply and
price would be forced to increase
D > S = P increases
Next explain the term Equilibrium Price
This is where supply = demand. By equilibrium we mean a situation from which there is
no tendency to change
If the price on the market e.g. tea is above the equilibrium price, there will be a
downward pressure on price. Quantity supplied will exceed quantity demanded and
producers will lower their price to get rid of surplus stock
If the price on the market e.g. tea is below the equilibrium price, there will be an upward
pressure on price. Quantity demanded will exceed quantity supplied and consumers will
be competing for a limited supply of the good. Scarcity would exist and price would
increase
If no interference in the market occurs (by government of other agency), price will
eventually settle at a level where quantity demanded equals quantity supplied. This
position is called the market equilibrium
Having defined demand and supply ask the student that bought the overpriced bar of
chocolate to define what these terms mean to him in light of the experience he just had,
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
explain why he was motivated to pay such a high price for it, and let us know if he would
have paid so much if he had know there were enough chocolate bars to go around.
Lesson Plan on the topic of ‘Supply’
Aim of Lesson:
The aim of this lesson is to incorporate the information students have learned from the topic
‘supply’, into workbook, exam and life related questions. Students should confidently and
competently recognise and understand the factors that affect the supply of a good and relate it to
life examples.
Objective of Lesson:
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Recap and discuss supply curves which are exceptions to the rule of supply
Recap and discuss the 5 factors affecting the supply of a good
Comprehension of the details involved in each factor
Understanding of the shifts in supply curve – both in the negative effect and positive
effect
 Efficiently answer questions on supply that are workbook related, exam related and
related to their daily lives
 Encourage an appreciation of economics throughout the class
Materials Used:
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Whiteboard
Overheads
Textbook
PowerPoint presentation
Products: salt + pepper, potatoes + pasta, beans + peas, coffee + hot chocolate
Homework sheet
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
Development 1 (lesson structure and methodology):
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Ask the students to explain the basic law of supply that relates to most products, eliciting
the following: as price increases, supply increases (P increases = S increases). If price
decreases, supply also decrease (P decreases = S decreases).
Question from homework should illustrate how the law of demand operates. Correct this
question according to the law of supply.
Next examine the 3 exceptions to the rule of Supply. These exceptions are put into
practice with homework questions
Ask the students to explain the first exception to the law Supply. That exception is as
follows:
Exception 1 = Perfect Inelastic Supply
o If the quantity supplied is fixed, so that an increase in price will not bring forth
further suppliers and a fall in price will not result in less being supplied e.g. fresh
fruit, vegetables, open-air markets
Next complete homework question in class so that this issue can be illustrated in
economic terms on a graph.
The students will be asked to explain the shape of the graph and a student will draw this
on the whiteboard
Students will then explain the answer to the questions with reference to Exception 1
Next ask the students to explain the second exception to the law of supply. This exception
is as follows:
Exception 2 = a minimum price is established below which supply will be zero
o Suppliers are able to impose a minimum price (P1). At prices below P1 nothing
will be supplied. At prices above P1 the curve will revert back to its normal
upward slope as increase in prices = increase in supply
o E.g. trade union where there is a minimum wage
Next complete homework question in class so that this issue can be illustrated in
economic terms on a graph.
The students will be asked to explain to me the shape of the graph and a student will draw
this on the whiteboard
Students will then explain the answer to the questions with reference to Exception 2
Next ask the students to explain the final exception to the law of supply. This exception is
as follows:
Exception 3 = the firm reaches its maximum output
o Depicts a situation where the firm increases output as price increases, up to its
maximum level of output Q1. Any increase in price above P1 will have no effect
on quantity supplied because the firm is operating at full capacity
Complete homework question in class so that this issue can be illustrated in economic
terms on a graph.
The students will be asked to explain to me the shape of the graph and another student
will draw this on the whiteboard
Students will then explain the answer to the questions with reference to Exception 3
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Draw the diagrams again on the whiteboard as per their explanations
As the class are completing the questions ask the students to give further examples to
support these exceptions
Sub-Development 1 (lesson structure and methodology)
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The next section of the lesson will recap the factors that affect the supply of a good.
There are 5 overall factors to consider.
Ask the students to list these 5 factors
Ask the students to briefly explain each of the 5 factors clearly and with good explanation
and ask for examples to support their explanations.
The factors that affect the supply of goods are as follows:
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Supply of a good depends on its own price
o Goods which obey the law of supply
o If price rise, quantity supplied rises
o If price falls, quantity supplied falls
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Supply of a good depends on the prices of related goods
o If price of a related good rises, while the price of the good the firm is making now
remains the same or falls, it becomes attractive for the firm to supply the good
that has increased in price
o An increase in price or a related good will cause a fall in the supply of Good Y
o Consequently it will switch resources to the production of the relatively more high
priced good
o A fall in the price of a related goodwill cause an increase in the supply of Good Y
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Supply of a good depends on the cost of production
o If there is an increase in the cost of production of Good Y, there will be a
reduction in supply. This will cause the supply curve to shift to the left
o Possible causes for an increase in the cost of production are as follows:
 A rise in labour costs
 A rise in the cost of raw materials
 An increase in tax
 A reduction in subsidies
o Similarly a fall in the cost of production will cause an increase in the supply of
Good Y and will cause the supply curve to shift to the right
o Possible causes for a decrease in the cost of production are as follows:
 A fall in labour costs
 A fall in the cost of raw materials
 A reduction in tax
 An increase in subsidies
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Supply of a good depends on the state of technology
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
o The methods of production available to the firm. As technology advances it
improves the productivity of the firm and therefore increases supply
o The supply curve will shift to the right
o It is important to note that we do not discuss a ‘fall’ in the state of technology.
This is because we assume that any method of production available to the firm
now will always remain an option to the firm
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Supply of a good depends on the factors outside the control of the firm
o Factors that are not planned in advance by the producer
o Favourable unplanned factors
 E.g. favourable weather conditions
 Causes a shift in the supply curve to the right = increase in supply
o Unfavourable unplanned factors
 E.g. a strike
 Causes a shift in the supply curve to the left = decrease in supply
When students have completed listing and explaining the 5 factors affecting supply the
teacher will write the supply function on the whiteboard as follows:
Sy = f(Py, Pr, C, T, U)
Continue with the homework.
Question 4 incorporates all of the factors discussed above.
Put up an overhead of a supply curve and for each point on question 4 the students will
inform the teacher what happens to the supply curve and teacher will amend it with a
whiteboard marker as required.
Briefly recap the concept of supply using a PowerPoint presentation which will illustrate
the shifts in the supply curves from a negative and a positive perspective.
Sub-Development 2 (lesson structure and methodology)
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The final part of the lesson will involve group work and a group exercise.
Students will be split into groups of 5 (4 groups all together)
A team leader will be designated to keep the worksheet safe and complete the analysis in
writing on behalf of the team
Give each group 2 related products.
The products are as follows:
 Salt + pepper
 Pasta + Potatoes
 Beans + Peas
 Coffee + hot chocolate
With these products give them a worksheet with a certain amount of information (see
attached)
The group will be required to discuss the products and information supplied and plot their
analysis on a supply curve
As the students are undertaking this exercise, the teacher will walk around the classroom
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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This is to ensure teacher is available for questioning by the students and also to ensure
management of the group work and maintain discipline
If time allows discuss the analysis from each team. Otherwise begin the next lesson with
their analysis and suggestions
Lesson Plan - Markets
Aim of Lesson:
The aim of this lesson is to continue the topic of with the topic of markets, explaining how the
laws of demand and the law of supply apply to the various markets.
Objective of Lesson:
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To recap on the definition of markets
To discuss what markets provide
Examine the way in which markets work
To discuss the types of markets
To examine markets in operation
To recap on the definition and explanation of the law of demand
To recap on the definition and explanation of the law of supply
Examine what happens when demand exceeds supply
Examine what happens when supply exceeds demand
Explain how supply and demand affects choices
Define and discuss excess supply and excess demand
Define and discuss equilibrium price
Discuss shifts in the supply and demand curves
To illustrate how markets and the law of demand and supply operate through class
activity
Materials Used:
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Whiteboard
Overheads
Textbook
Newspaper clipping handout
PowerPoint presentation
Index price cards
Introduction:
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 Ask the students to take out the newspaper clipping from the previous lesson.
 This clipping was on the product Playstation 3 which was not available in Europe until
March 2007.
 A British man paid over €11,000 for an advance copy of the product. This is a great
example of demand and supply that the students can relate to.
Development 1 (lesson structure and methodology):
 Write the term ‘Markets’ on the whiteboard
 Students were asked in the workbooks to define a market, so a good definition is
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expected
Randomly choose a student to answer this question
Using an overhead support this answer using the economic definition as follows:
 ‘A market is a mechanism by which potential buyers of a good or service
are brought into contact with potential sellers of that good or service’.
Ask the students to explain simply what are markets, eliciting the point that markets are
where buyers and sellers meet
Next recap on what economic questions do markets provides answers to. Ask students
randomly to elicit the following points:
13. What goods should be produced (and in what quantities)?
14. For whom are goods produced?
15. How are the goods to be produced (what combination of the factors of
production should be used)?
16. What rewards should be given to those who supply the factors of
production?
Next ask students where one would find a market – eliciting as many examples as
possible including the following:
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
3. A market can be confined to a particular location e.g. the New York Stock
Exchange and the London Stock Exchange
4. A market may also be dispersed, as is the market for foreign currencies
which extends worldwide and is know as the Foreign Exchange market
 Ask for further examples of markets based on this example
 Next ask students for examples of markets that can be created and list these on the
whiteboard using a spider diagram
Sub-Development 1 (lesson structure and methodology)
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Ask students to close their workbooks and test books for the time being so that the class
may examine markets in greater detail
Explain to the students that there are 3 categories of market in our economies. These are
as follows:
4. Factor Markets
5. Intermediate Markets / Producer Markets
6. Final Markets / Goods Markets
Examine each of these markets in detail individually
Factor Markets:
 A factor market is a market where a factor of production is bought and
sold
 The buyer is the entrepreneur who wants to use the factor in the
production of goods and services
 The seller is the owner of the factor of production in question
 Price is determined in the same way – this represents income to the owner
of the factor of production
 Rent = income to the owner of the land
 Wages = the reward to the supplier of labour
 Interest = the return to the owner of capital
Intermediate Markets / Producer Markets
 An intermediate market is one where output (i.e. raw material) is sold to
be used as input in the production of another good
 Example: the output of the steel industry is bought by car manufacturing
firms in the making of cars
Final Markets / Goods Markets
 Final markets are markets that deal in goods and services that give
consumers utility and for which they are therefore prepared to pay a price
 Examples: food, drink, clothing, furniture, household appliances
For each market, elicit as many examples as possible of each market and draw these on
the whiteboard
At this point ask the students if they have any questions and answer any that are posed
Sub-Development 2 (lesson structure and methodology)
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Re-explain to the students that every market works through the interaction of supply and
demand.
Ask the students what we mean when discussing the law of demand for a good eliciting
the following: ‘we mean the quantity consumers are willing to buy at different prices’
Next ask the students what we mean when discussing the law of supply, eliciting the
following: ‘we mean the quantity that producers would be willing to make available at
different prices’
A market works on the principle that there is some price that satisfies both consumers and
producers. Emphasise to the student that this point is extremely important to know and
understand.
At this point ask the students if they have any questions and answer any that are posed
Examine the situation from the view of the consumer and from the view of the producer
using different examples
Sub-Development 3 (lesson structure and methodology)
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First consider the consumer and recap the Law of Demand
Ask the students to define demand. Demand can be defined as follows:
 If price rises, quantity demanded falls and if price falls, quantity
demanded rises
Put this statement on the overhead projector so students can read the statements again.
Again explain to the students that the Law of Demand is very important to know as it will
help us understand how consumers operate in markets
Next consider the situation from the point of the producer and recap on the Law of
Supply
Ask the students to define supply. Supply can be defined as follows:
 If price rises, quantity supplied rises and if price falls, quantity supplied
falls
Put this statement on the overhead projector so students can read the statements again.
Explain that Supply is very important to know as it will help us understand how
producers operate in markets
Sub-Development 4 (lesson structure and methodology)
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Next recap on the Demand Schedule and Demand Curve. The teacher wants to ensure
that students understand this extremely well as it is vital for many areas of economics
Put an overhead on the projector illustrating the market for tea in Ireland – demonstrating
the relationship between price and quantity
This list will show the quantities that would be demanded at number of different prices.
Ask the students what this table is called eliciting the following: a demand schedule
Examine this table as a class, and highlight to each student that quantity demanded and
sold will increase as price decreases
Then explain to the students that demand can also be illustrated graphically. Ask the
students what this graph is called, eliciting that this is known as a demand curve
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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Then show an overhead of the demand curve for the table previously discussed on the tea
market in Ireland.
Explain the Demand Curve to the students and instruct them to take it down in their copy
books
Staying with the examples of the tea market in Ireland, look at the supply schedule of tea
and look at the relationship between price and quantity
Then present this information on a supply curve
Discuss as a class the differences between demand and supply
Continue with explaining the term excess supply
Excess supply exists when quantity supplied is greater then quantity demanded
Producers have no option but to lower the prices
S > D = P decreases
Next explain the term excess demand
Excess demand exists when quantity demanded is greater then quantity supplied
In this case consumers would compete against each other for the available supply and
price would be forced to increase
D > S = P increases
Next explain the term Equilibrium Price
This is where supply = demand. By equilibrium we mean a situation from which there is
no tendency to change
If the price on the market e.g. tea is above the equilibrium price, there will be a
downward pressure on price. Quantity supplied will exceed quantity demanded and
producers will lower their price to get rid of surplus stock
If the price on the market e.g. tea is below the equilibrium price, there will be an upward
pressure on price. Quantity demanded will exceed quantity supplied and consumers will
be competing for a limited supply of the good. Scarcity would exist and price would
increase
If no interference in the market occurs (by government of other agency), price will
eventually settle at a level where quantity demanded equals quantity supplied. This
position is called the market equilibrium
Having defined demand and supply hand the students a copy of an old newspaper article
advertising Playstation 3. The product has not yet launched on the European market and a
customer paid over €11,000 for an advance version of the product. Discuss the laws of
demand and supply in relation to this particular product
Sub-Development 5 (lesson structure and methodology)
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Next present the students with a PowerPoint presentation
This presentation will illustrate how the laws of demand and supply apply to factor
markets and to goods markets
This presentation will demand and supply in terms of equations and how they are
represented on supply and demand curves
It will also take into consideration what happens if there is a shortage in either of these
markets
Discuss the shifts in the demand curve and the shifts in the supply curve
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies
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The final part of the presentation will take into account the equilibrium price
As a product use the example of potatoes
The PowerPoint presentation will illustrate effectively the demand / supply schedules on
demand / supply curves
It will also hold the students interest as it is creative and technologically orientated which
students understand and have an interest in.
Sub-Development 6 (lesson structure and methodology)
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For the final part of class, carry out a class activity as follows:
Students will be asked to think of three items on their desks and to secretly set a price for
each one of them on the index card that will be handed out the each one.
They will then fold their index cards so it can stand upright on their desks
Students will then be instructed to place their items by their price list
Students will then be invited to go ‘shopping’ and check out all the prices in the ‘shop’
Lead the students into discussion asking questions such as the following:
 Now that you can see how other merchants priced their items, how will it
effect your pricing of the same item
 Were there some items that would be in high demand because of their low
supply?
 How might that effect pricing?
Students may want to stock their ‘shelves’ differently after doing some comparisonshopping and seeing the availability of certain items.
Give the students the opportunity to price another 3 items of their choice and discuss their
changes and why they were made.
v
Trudie Murray©
St. Patrick’s College, Cork City
Economics Methodologies