Economics & Business · Year 7

Active learning ideas

How Prices are Set: Supply and Demand Basics

Active learning works for supply and demand because students must experience price formation directly to shed the myth that prices are set by stores or governments alone. When students negotiate prices in real time, they see how market forces and individual choices shape outcomes, making abstract curves concrete.

• ACARA Content Descriptions
• AC9HE7K02

• 30–50 min
• Pairs → Whole Class
• 4 activities

Activity 01

• Simulation Game
• 45 min · Small Groups

Simulation Game: Classroom Candy Auction

Divide class into buyers and sellers with limited candy supply. Buyers submit bids on cards; sellers accept highest offers. Run three rounds, reducing supply each time and recording prices. Groups debrief on why prices rose.

Explain how a sudden shortage of a popular toy might affect its price.

Facilitation Tip

During the Classroom Candy Auction, circulate and ask each group to explain why they’re bidding the price they chose, linking their reasoning to supply and demand concepts.

What to look for

On a slip of paper, ask students to describe what would happen to the price of ice cream on a very hot day if the number of ice cream trucks suddenly doubled. They should use the terms 'supply' and 'demand' in their answer.

• Apply
• Analyze
• Evaluate
• Create
• Social Awareness
• Decision-Making

Activity 02

• Decision Matrix
• 30 min · Pairs

Graphing: Demand Shock Exercise

Pairs receive printed supply and demand graphs for apples. Introduce events like a drought or fad diet; students shift curves and note new equilibrium prices. Share findings whole class.

Analyze the role prices play in signaling to producers what they should make more of.

Facilitation Tip

For the Demand Shock Exercise, model how to shift a curve on the board before students work in pairs so they see the visual logic first.

What to look for

Present students with a scenario: 'A popular video game is released, but production issues mean only half the usual number are available.' Ask them to write down two things that might happen to the price of the game and why, using the concept of demand.

• Analyze
• Evaluate
• Create
• Decision-Making
• Self-Management

Activity 03

• Decision Matrix
• 50 min · Small Groups

Role-Play: Price Ceiling Debate

Assign roles as renters, landlords, and government officials. Enact a rent cap scenario with props for housing units. Observe shortages form, then vote on policy changes and explain outcomes.

Justify why a government might intervene to set a maximum price on essential goods.

Facilitation Tip

During the Price Ceiling Debate, assign roles clearly and give each student two sticky notes to record pros and cons before the full discussion to ensure participation.

What to look for

Facilitate a class discussion using this prompt: 'Imagine the government decided to put a maximum price on movie tickets to make them cheaper. What are two good things that might happen, and two bad things that might happen because of this decision?'

• Analyze
• Evaluate
• Create
• Decision-Making
• Self-Management

Activity 04

• Case Study Analysis
• 35 min · Individual

Case Study Analysis: Real-World Shortage Hunt

Individuals research a recent Australian shortage, like toilet paper in 2020, using news articles. Sketch supply-demand graphs showing price effects. Present one key insight to the class.

Explain how a sudden shortage of a popular toy might affect its price.

What to look for

On a slip of paper, ask students to describe what would happen to the price of ice cream on a very hot day if the number of ice cream trucks suddenly doubled. They should use the terms 'supply' and 'demand' in their answer.

• Analyze
• Evaluate
• Create
• Decision-Making
• Self-Management

A few notes on teaching this unit

Start with the simulation to build intuition before introducing graphs or theory, because students need to feel price pressure before they can interpret curves. Avoid lecturing on shifts until students have experienced a market adjusting. Research shows that active participation increases retention of economic concepts by over 50% compared to passive delivery.

Successful learning looks like students using terms such as supply, demand, equilibrium, and shortage correctly during discussions and simulations. They should explain how shifts in one curve affect price and quantity, and justify their reasoning with evidence from graphs and role-plays.

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Watch Out for These Misconceptions

• During the Classroom Candy Auction, watch for students who think the store sets the price.

  After the auction, ask groups to state what determined the final price and how their bids reflected their own demand and the limited supply of candy.

• During the Demand Shock Exercise, watch for students who believe a demand shift alone always lowers prices.

  Have students test a demand increase with a fixed supply on their graphs and explain why prices rise, using the visual evidence they created.

• During the Price Ceiling Debate, watch for students who think price ceilings always help consumers.

  Prompt students to use the auction results or graphing exercise to explain how a ceiling can create shortages when supply is limited, linking theory to their earlier experiences.

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Methods used in this brief

• Simulation Game
• Decision Matrix
• Case Study Analysis