Decoding Market Equilibrium: Finding the Sweet Spot of Supply and Demand

Economics Grades High School 10:17 Video
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Lesson Description

This lesson explores the concept of market equilibrium, where supply and demand balance to determine price and quantity in a market, using the Khan Academy video as a guide.

Video Resource

Market equilibrium | Supply, demand, and market equilibrium | Microeconomics | Khan Academy

Khan Academy

Duration: 10:17
Watch on YouTube

Key Concepts

  • Supply and Demand
  • Equilibrium Price
  • Equilibrium Quantity
  • Shortage
  • Surplus

Learning Objectives

  • Students will be able to define and explain the concepts of supply and demand.
  • Students will be able to identify the equilibrium price and quantity on a supply and demand graph.
  • Students will be able to explain how shortages and surpluses occur and how they drive prices toward equilibrium.

Educator Instructions

  • Introduction (5 mins)
    Begin by asking students about their understanding of supply and demand. Briefly discuss examples of how prices change in response to availability and consumer interest. Introduce the Khan Academy video as a tool for further exploration.
  • Video Viewing (15 mins)
    Play the Khan Academy video 'Market equilibrium | Supply, demand, and market equilibrium | Microeconomics | Khan Academy.' Encourage students to take notes on key terms and concepts.
  • Guided Discussion (15 mins)
    Facilitate a discussion based on the video. Focus on defining supply, demand, equilibrium price, equilibrium quantity, shortage, and surplus. Use examples from the video (the apple market) and real-world scenarios to illustrate these concepts.
  • Activity: Graphing Supply and Demand (15 mins)
    Divide students into small groups and provide them with hypothetical supply and demand schedules for a product (e.g., movie tickets, pizza slices). Have them graph the supply and demand curves and identify the equilibrium price and quantity. Each group should present their findings to the class.
  • Conclusion (5 mins)
    Review the key concepts of market equilibrium and how shortages and surpluses influence price adjustments. Emphasize the importance of understanding these concepts for analyzing real-world economic situations.

Interactive Exercises

  • Market Simulation
    Simulate a market scenario where students act as buyers and sellers. Provide each student with a valuation (willingness to pay) or cost (minimum selling price) for a good. Have them negotiate trades to observe how the market converges towards equilibrium.
  • News Analysis
    Assign students to find news articles that illustrate supply and demand dynamics in a particular market (e.g., housing, oil, electronics). Have them analyze the factors affecting supply and demand and how they influence prices.

Discussion Questions

  • How does the price of a product affect the quantity demanded by consumers?
  • How does the price of a product affect the quantity supplied by producers?
  • What happens in a market when the price is above the equilibrium price? Below the equilibrium price?
  • How can understanding supply and demand help businesses make better decisions?

Skills Developed

  • Critical Thinking
  • Economic Analysis
  • Graphing
  • Problem Solving

Multiple Choice Questions

Question 1:

What is market equilibrium?

Correct Answer: A situation where quantity supplied equals quantity demanded

Question 2:

If the price of a product is above the equilibrium price, what is likely to occur?

Correct Answer: A surplus

Question 3:

What is the quantity demanded?

Correct Answer: The amount of a product consumers are willing and able to buy at a specific price.

Question 4:

What does the intersection of the supply and demand curves represent?

Correct Answer: The equilibrium price and quantity

Question 5:

What is the likely effect of a shortage on the price of a product?

Correct Answer: The price will increase

Question 6:

If a new technology lowers the cost of producing apples, what would you expect to happen to the equilibrium price and quantity of apples?

Correct Answer: Price decreases, quantity increases

Question 7:

Which of the following is NOT a factor that influences demand?

Correct Answer: The cost of resources used to produce the good

Question 8:

What happens to the quantity supplied as the price of a product increases?

Correct Answer: It increases

Question 9:

A situation where the quantity supplied exceeds the quantity demanded is called a:

Correct Answer: Surplus

Question 10:

In the video, what product's market was used to demonstrate the concepts of supply, demand, and equilibrium?

Correct Answer: Apples

Fill in the Blank Questions

Question 1:

The point where the supply curve and the demand curve intersect is called the ___________.

Correct Answer: equilibrium

Question 2:

A ___________ occurs when the quantity demanded is greater than the quantity supplied.

Correct Answer: shortage

Question 3:

The ___________ price is the price at which the quantity supplied equals the quantity demanded.

Correct Answer: equilibrium

Question 4:

A ___________ occurs when the quantity supplied is greater than the quantity demanded.

Correct Answer: surplus

Question 5:

The ___________ curve shows the relationship between the price of a good and the quantity that consumers are willing and able to buy.

Correct Answer: demand

Question 6:

The ___________ curve illustrates the relationship between the price of a good and the quantity that producers are willing and able to sell.

Correct Answer: supply

Question 7:

If the price of a good is set artificially high, it will likely lead to a __________.

Correct Answer: surplus

Question 8:

The quantity bought and sold at the equilibrium price is known as the ___________ quantity.

Correct Answer: equilibrium

Question 9:

Consumer tastes, income, and expectations are all factors that can shift the ___________ curve.

Correct Answer: demand

Question 10:

Technological advancements, input costs, and the number of sellers are all factors that can shift the ___________ curve.

Correct Answer: supply

Educational Standards

SOC.9-12.E.3.1:Analyze how price and non-price factors affect the demand and supply of goods and services available in the marketplace. SOC.9-12.E.3.2:Explain what causes shortages and surpluses including government-imposed price floors, price ceilings, and other government regulations and the impact they have on prices and people’s decisions to buy or sell. SOC.9-12.E.4.2:Explain how people’s own self-interest, incentives, and disincentives influence market decisions.

Teaching Materials

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