AP Macroeconomics
Unit 4: Microeconomics-Supply and Demand
Standards:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
c. Define price elasticity of demand and supply.
Day 1:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
d. Explain how prices serve as incentives in a market economy
EQ: How does the interaction of buyers and sellers create the forces of supply and demand in a
market economy?
Focus Question: What is the law of demand, and how is it graphically represented?
1. Warm Up: Put an obscure picture of a cow on the SmartBoard. Ask students to raise their
hands if they know what they are seeing. Allow students to ask “yes” or “no” questions
about the picture. Then ask the students to raise their hands if they know what they are
seeing. Next, outline the cow. Ask students to raise their hands if they know what they are
seeing. Finally, have students discuss their understanding of the picture with a partner.
Now ask how many people understand what they see.
2. Tell students that while this picture is not economics, it can tell us a lot about seeing and
understanding economic models. Some people see and understand the models immediately,
whereas it takes others a while. However, once you “see the cow” you will always be able to
“see the cow.” Also emphasize the importance of helping each other “see the cow.” Everyone
was able to see the cow by the time they were helped by a peer. Teaching someone else does
not just benefit the student. Studies show you remember about 90% of what you teach.
3. Segue into Supply and Demand. Have students T/P/S on what they think of when they hear the
phrase “Supply and Demand.” Explain to students that to economists, supply and demand are
very specific models that explain how competitive markets work.
4. Focus on Demand: We are going to do a quick exercise in demand. Tell class you are selling a
year-long problem set pass. How many students would buy it for $100? $75? $50? $25? Etc.
Plot class data in a demand schedule. Have students examine the data to derive Law of
Demand. Discuss reasons for Law of Demand.
5. Model plotting data in curve. Discuss characteristics of a demand curve.
6. Student paired practice: Reading a demand curve. (Access via online classroom.) Go over
practice.
7. Closing: Lesson Recap and Socrative Exit Ticket.
Day 2:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
d. Explain how prices serve as incentives in a market economy
EQ: How does the interaction of buyers and sellers create the forces of supply and demand in a
market economy?
Focus Question: What is the law of supply and how is it graphically represented?
1. Warm Up: Give students demand schedule data with questions on Smart Board. Have them
work in pairs to review the characteristics of a demand curve. Go over questions.
2. Tell students that today we will focus on the supply curve.
3. Tell them, that you need help this Saturday babysitting your two kids. Ask them to look at the
circular flow to determine which market we are working in. Who is the supplier? Ask a student:
How many hours would you work for $5 per hour? $10 per hour? $15? $20? $25? $30? Plot the
data in a supply schedule. Have students derive Law of Supply using data. Discuss reasons for
the Law of Supply. Model plotting data in curve. Discuss characteristics of supply curve.
4. Student paired practice; Reading a supply curve. (Students access via online classroom). Go
over practice as a class.
5. Closing: Lesson recap and Socrative Exit Ticket
Day 3:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
EQ: How does the interaction of buyers and sellers create the forces of supply and demand in a
market economy?
Focus Question: How do buyers and sellers work together to determine prices in a market economy?
1.
Warm Up: What kinds of prices are incentives for buyers, based on the Law of Demand? What
kinds of prices are incentives for sellers? What problem do you see? Students will work in pairs
to answer the questions. Discuss as a class.
2. Oil Market Simulation: Divide students into two groups. Students will either be buyers or
sellers of barrels of oil. Students will each receive a card with a price for a barrel of oil that they
cannot go either above or below. Students will negotiate over and over in three different timed
rounds. The seller must report the price to the teacher each time a sale is made. In addition,
students will record their profits/losses for each round At the end of each round we will
examine the price data. Eventually,,, by the third round, we should start to see the prices
clump.
3. Allow students to determine who was the most profitable.
4. Closing/Debrief: How do buyers and sellers reach a market price in a competitive market?
What do you notice about the data from round to round? Lead students to the idea of an
equilibrium price between buyers and sellers.
Day 4:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
EQ: How does the interaction of buyers and sellers create the forces of supply and demand in a
market economy?
Focus Questions: 1) When is a market in equilibrium? 2) When is a market in disequilibrium? 3)
Distinguish between the two types of disequilibrium.
1. Warm Up: When students come in, have a demand schedule and a supply schedule on the
board. Have students graph both schedules in the same grid.
2. Ask students: What do you see happening when this data is graphed in the same space?
Students should immediately recognize that they intersect. Ask students: How might this relate
3.
4.
5.
6.
7.
8.
9.
10.
to our activity from the previous day? Students should relate it to the tendency for prices to
clump toward the middle of the price range.
Explain to students that this point is what we call “market equilibrium”, also known as the
“market-clearing price.” Ask students, what is the market clearing price and the market
clearing quantity. Allow students to respond and discuss how that information was located.
Draw students’ attention to prices above and below the market clearing price. Ask students to
describe what is going on at these prices. Lead students to call these areas “disequilibrium.”
Explain to students that there are two types of disequilibrium: surplus and shortage.
Have students work in elbow buddies to determine which area represents shortage and which
area represents surplus. Have students explain how they knew.
Paul Solman clip on Equilibrium – How is this point so efficient?
Socrative Questions: How comfortable do you feel with equilibrium/disequilibrium? Use to
differentiate pairs for practice.
Practice: Students will work in pairs reading and examining market supply and demand graphs,
and answering questions about the graphs. Go over as a class.
Closing: Lesson Recap and Socrative Exit Ticket
Day 5:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
EQ: How does the interaction of buyers and sellers create the forces of supply and demand in a
market economy?
1. Warm Up: Students pick up index cards. Draw a competitive market in equilibrium. Shade and
label areas of shortage and surplus. Share with partner once done and compare.
2. Kahoot Review
3. Quiz. (Data from this quiz will be used for differentiated pairing during next section of the unit.)
4. After the quiz, students pick up a copy of “Economics by Example.” Students will turn to page
70 and read the article entitled “Why Should We Pay for What We Throw Away?” Using
Edmodo, students will create an online discussion about the article.
5. Closing: Discuss per-unit pricing topic in the article. Relate it back to marginal benefit and the
demand curve.
Day 6:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
EQ: How does government involvement in a market interfere with market efficiency?
Focus Question: What is a price floor, and what type of disequilibrium does it create? What is a
price ceiling, and what type of disequilibrium does it create?
1. Warm up: Students draw following scenario. Assume the market for milk is in equilibrium at $4.00
per gallon, with a total 10 million gallons sold per week. Due to pressure from dairy farmers who
feel their business will go under due to rising costs and too much competition, farmers are asking for
government to set a minimum $6 price.
2. Show students picture of what their model should look like. Allow them time to correct it.
3. Ask students to discuss what is happening in milk market. Guide them to understand that this is a
government-created disequilibrium in the market known as a price floor. Define/ explain.
4. In pairs, have students determine what type of disequilibrium is being created. Have a student
volunteer to show how they know which type of disequilibrium is occurring.
5. Discuss reasons for a price floor. Have students come up with other types of price floors. Share and
discuss.
6. Turn to partners and explain: Why are price floors located above equilibrium? Let students work
together and ask for volunteers to explain.
7. Assess Socrative Review Questions
1. Price floors are set (above/below) equilibrium.
2. Price floors create (shortages/surpluses).
3. Price floors are intended to (raise/lower)prices.
4. Price floors tend to benefit (producers/consumers).
5. Price floors are a (minimum/maximum) price.
8. Have students draw the following scenario. Assume the market for milk is in equilibrium at $4.00
per gallon, with a total 10 million gallons sold per week. Many people feel this is too high of a price
for such an essential diet stable, and begin pushing politicians to set a maximum price of $3/gallon.
9. Show students picture of what their model should look like. Allow them time to correct it.
10. Ask students to discuss what is happening in milk market. Guide them to understand that this is a
government-created disequilibrium in the market known as a price ceiling. Define/ explain.
11. In pairs, have students determine what type of disequilibrium is being created. Have a student
volunteer to show how they know which type of disequilibrium is occurring.
12. Discuss reasons for a price ceiling. Have students come up with other types of price ceilings. Share
and discuss.
13. Turn to partners and explain: Why are price ceilings located below equilibrium? Let students work
together and ask for volunteers to explain.
14. Closing: Lesson Recap and Socrative Question Review
1. Price ceilings are set (above/below) equilibrium.
2. Price ceilings create (shortages/surpluses).
3. Price ceilings are intended to (raise/lower)prices.
4. Price ceilings tend to benefit (producers/consumers).
5. Price ceilings are a (minimum/maximum) price.
Day 7:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
EQ: How does government involvement in a market interfere with market efficiency?
Focus Question: How do government price controls affect market efficiency?
1. Warm Up: Assume a politician is pushing to set a minimum wage of $50,000 for all college
graduates. Develop a list of five implications of this plan.
2. Explain to students, that our supply and demand model can be used to examine overall market
efficiency. Using a supply and demand model, show and explain consumer and producer
surplus. Discuss what each means.
3. Tell students, that price floors and price ceilings affect the size of both consumer and producer
surplus.
4. Give students Rockmart price scenarios. Have students work in pairs to find consumer and
producer surpluses with price controls. Introduce concept of deadweight loss.
5. Review scenarios and have students check their models.
6. Closing: Socrative Exit Ticket
Day 8:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
EQ: How does government involvement in a market interfere with market efficiency?
Focus Question: How can I distinguish between a price floor and a price ceiling?
1. Warm Up: Warm Up: Have a S/D model drawn on board. Which price could be a price ceiling?
(3.00 b/c it is below equilibrium). Why would government never set a price floor at $9.00?
Students discuss in pairs and review together.
2. Tell students that today they will get practice in distinguishing between price floors and price
ceilings.
3. NearPod activity: Series of questions and case studies to practice the difference between price
floors and price ceilings. Teacher will circulate.
4. After students complete the Nearpod practice activity, they will spend time examining videos
and articles in the minimum wage debate.
Day 9:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
EQ: How does government involvement in a market interfere with market efficiency?
Focus Question: How is the minimum wage a price floor? Do the benefits of having a minimum
wage outweigh the costs?
1. Warm Up: Students read Socratic Seminar requirements.
2. Tell students that today we are going to focus on the most prominent and hotly debated price
floor in our country: the minimum wage. Tell students they will continue to look at a series of
videos, articles, and statistics on minimum wage. Some show support for minimum wage, and
other are against minimum wage. (Use Nearpod). As they view these, they will take notes of
evidence for and against the minimum wage, and be ready to discuss.
3. Closing: Socrative Minimum Wage Poll
Day 10:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
EQ: How does government involvement in a market interfere with market efficiency?
Focus Question: How is the minimum wage a price floor? Do the benefits of having a minimum
wage outweigh the costs?
*** Class will take place in room 403.
1. Warm Up: Turn to a buddy. Briefly share your thoughts on the minimum wage and give what
you think is your most compelling evidence.
2. Whole Class Socratic Seminar on the minimum wage.
3. Closing: Socrative short answer question explaining opinion on minimum wage.
Day 11:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
EQ: How do buyers and sellers create the forces of supply and demand in a market economy?
Focus Questions: Why might consumers change their purchasing habits? How do we reflect those
changes on a demand curve?
1. Warm Up: Other than a change in price, what could cause you to buy more or less Coca-Cola?
Students brainstorm and share ideas.
2. Explain to students that when price changes, we simply move along the demand curve.
However, when something OTHER than price changes, we will change the entire demand curve.
3. Example 1: Let’s assume that a new study came out that said Coca-Cola helps you to get high
SAT scores. Put up an original demand schedule. How might these numbers in the demand
schedule change? Students discuss. How will this change our graph? Graph it out with
students. Explain that what has happened here is that demand has increased at all prices.
When this happens, the demand curve will shift to the right.
4. Example 2: Let’s assume that a new study comes out that says Coca-Cola has slightly negative
effects on IQ scores. Put up original demand schedule. How might these numbers in the
demand schedule change? Students discuss. How will this change our graph? Graph it out with
students. Explain that what has happened here is that demand has decreased at all prices.
When this happens, the demand curve will shift to the left.
5. Introduce IRDL as a way to remember shift direction.
6. Student practice: Give students a set of problems that require them to look at models and data.
They must decide if demand is increasing, decreasing, or not changing (i.e. only a change in
quantity demanded.)
7. Go over student practice.
8. Closing: Lesson Recap and Socrative Exit Ticket
Day 11:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
EQ: How do buyers and sellers create the forces of supply and demand in a market economy?
Focus Questions: Why might consumers change their purchasing habits? How do we reflect those
changes on a demand curve?
1. Warm Up: Give students three scenarios. What will happen to the demand curve in each
scenario?
2. Introduce TRIBE to students as a framework for thinking about demand shifts. Briefly go over
PDF handout on online classroom.
3. Students work in pairs to practice analyzing demand shift situations.
4. Go over situations.
5. Closing: Lesson Recap and Socrative Quick Check Questions
Day 12:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
EQ: How do buyers and sellers create the forces of supply and demand in a market economy?
Focus Questions: Why might suppliers change their production habits? How do we reflect those changes
on a supply curve?
1. Warm Up: Change in Demand or Change in Quantity Demanded practice.
2. Tell students that, just like the demand curve, factors other than price can cause the entire
supply curve to shift.
3. Give students data set 1. Have students create their own data to show an increase in supply.
Discuss why this data would show an increase in supply. Graph it out together. Discuss what
happened to the supply curve. Help students see that when the supply increased, the supply
curve shifted to the right.
4. Give students data set 2. Have students create their own data to show a decrease in supply.
Discuss why this data would show a decrease in supply. Graph it out together. Discuss what
happened to the supply curve. Help students see that when the supply decreased, the supply
curve shifted to the left.
5. Remind students of IRDL as a tool to help remember shifting direction.
6. Review TIPTEN as a framework for differentiating between a supply shift and a demand shift.
7. Student practice: Give students a set of problems that require them to look at models and data.
They must decide if demand is increasing, decreasing, or not changing (i.e. only a change in
quantity demanded.)
8. Go over student practice.
9. Closing: Lesson Recap and Socrative Exit Ticket
Day 13:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
EQ: How do buyers and sellers create the forces of supply and demand in a market economy?
1.
2.
3.
4.
Warm Up: Change in Supply or Change in Quantity Supplied practice
Review additional supply shift scenarios. (This will take the bulk of class.)
Introduce Supply/Demand Shift project.
Closing: Fist to Five on understanding components of project.
Day 14:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
EQ: How do buyers and sellers create the forces of supply and demand in a market economy?
1. Warm Up: Supply/Demand shifting problems (Which one shifts supply? Which one shifts
demand? How can you tell?
2. Students begin project:
- Students will be paired. Teacher will assign partners based on Socrative quizzes.
- Part 1: Students must find 3 current events that are causing changes in supply and/or
demand. Students will summarize article, show the shift, and suggest broader implications
of the shift.
- Part 2: Students will select a historical example where a market shift occurred. They will
describe the event, draw the shift, and discuss the effects of this shift.
- Part 3: Students will create their own hypothetical market shift and shift the curve.
3. Closing: Poll students on whether or not this activity is helping them understand the difference
between a supply shift and/or a demand shift.
Day 15:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
EQ: How do buyers and sellers create the forces of supply and demand in a market economy?
1. Warm Up: Example Supply/Demand shifting problem. What is shifting? How do you know?
2. Students are given time to complete and submit project. (Have more practice problems in case
students finish early.)
3. Closing: Fist to Five on the understanding of supply/demand shifts.
Day 16:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
c. Define price elasticity of demand and supply.
EQ: How can we measure a consumer or producer’s response to a change in price?
1. Warm Up: US History connected shifting problems. Go over as a group.
2. Use SmartNotebook lesson on price elasticity of demand. Students will have PDF available on
online classroom. Lesson will cover:
a. Definition of elasticity
b. Calculation of elasticity
c. Factors that affect elasticity
d. Why elasticity matters
3. Allow students to practice identifying elastic and inelastic demand/supply. Review.
4. Closing: Lesson Recap and Socrative Exit Ticket
Day 17:
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
c. Define price elasticity of demand and supply.
EQ: How can we measure a consumer or producer’s response to a change in price?
1. Warm Up: Elasticity Practice Problems
2. Go over elasticity practice problems.
3. AP-problems challenge packet: Students will work on problems in pairs.
4. Closing: Go over questions with students to be sure they understand the AP-level shifting
problems.
Day 18:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
c. Define price elasticity of demand and supply.
EQ: How does the interaction of buyers and sellers create the forces of supply and demand in a
market economy?
1. Warm Up: Price floor/price ceiling practice question.
2. Give students a set of practice AP-level multiple choice questions for this unit. Allow students to
work in pairs to analyze and answer the questions.
3. Go over questions as a group and have students self-evaluate.
4. Closing: Discuss key strategies in effectively dealing with the multiple choice questions.
Day 19:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
c. Define price elasticity of demand and supply.
1. Warm Up: Students access two AP FRQ questions as they come in. Students will take 20
minutes to try to answer the question.
2. Allow students to get into small groups to discuss FRQ answers.
3. Give students an example of the BEST FRQ answers. Have students self-evaluate.
4. Closing: Discuss how to maximize points on an FRQ.
Day 20:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
c. Define price elasticity of demand and supply.
FRQ section of test
Day 21:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
c. Define price elasticity of demand and supply.
Multiple Choice Test
Day 22:
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence economic
behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create
shortages.
c. Define price elasticity of demand and supply.
1.
2.
3.
4.
Warm-Up: Students examine test data.
Pass back tests.
Students work in pairs on test corrections. Teacher will circulate to assist.
Closing: Remind students of retest options.