HASS · Year 8 · Economics and Business · Term 4

Introduction to Economic Concepts

Students will learn fundamental economic concepts such as scarcity, opportunity cost, and the basic economic problem.

• ACARA Content Descriptions
• AC9E8K01

About This Topic

The Market System introduces the core economic concepts of supply and demand. Students investigate how the interaction between buyers and sellers determines what is produced and at what price. They explore the 'law of demand' (as price goes up, demand goes down) and the 'law of supply' (as price goes up, producers want to sell more), and how these forces find a balance in the market.

In the Year 8 Economics and Business curriculum, this topic provides the foundation for understanding how the Australian economy works. It teaches students to be more informed consumers by understanding why prices change. By looking at real-world examples, such as the price of fruit in different seasons or the demand for new technology, students see economics as a living system that affects their daily lives.

This topic comes alive when students can participate in a market simulation to experience the 'tug-of-war' between supply and demand firsthand.

Key Questions

1. Explain the concept of scarcity and its impact on economic decision-making.
2. Analyze how opportunity cost influences choices made by individuals and governments.
3. Differentiate between needs and wants in an economic context.

Learning Objectives

• Explain the fundamental economic problem of scarcity and its implications for resource allocation.
• Analyze how opportunity cost influences decision-making for individuals, businesses, and governments.
• Differentiate between economic needs and wants, providing examples for each.
• Identify the basic economic questions that all societies must answer regarding production, distribution, and consumption.

Before You Start

Basic Needs and Wants

Why: Students need a foundational understanding of what people require to live versus what they desire to have a comfortable life.

Introduction to Money and Exchange

Why: Understanding how money functions as a medium of exchange is crucial before exploring how scarcity impacts choices involving limited financial resources.

Key Vocabulary

Scarcity	The basic economic problem that arises because people have unlimited wants but resources are limited. This forces choices about what to produce and consume.
Opportunity Cost	The value of the next-best alternative that must be forgone when a choice is made. It represents what is given up when a decision is taken.
Needs	Goods and services that are essential for survival, such as food, water, shelter, and basic clothing.
Wants	Goods and services that are desired but not essential for survival. These can range from simple comforts to luxury items.
Resources	The inputs used to produce goods and services. These include natural resources, labor, capital, and entrepreneurship.

Watch Out for These Misconceptions

Common Misconception

Businesses can just set any price they want.

What to Teach Instead

If a business sets a price too high, demand will drop and they won't sell anything; the market forces them to find a price people are willing to pay. A market simulation helps students see this 'invisible hand' in action.

Common Misconception

Supply and demand only applies to big companies.

What to Teach Instead

It applies to everything from a local bake sale to the global oil market. Peer discussion about everyday items helps students see the universal nature of the market system.

Active Learning Ideas

Simulation Game: The Apple Market

Students are divided into buyers and sellers of apples. The teacher changes the 'supply' (e.g., a bad harvest) or 'demand' (e.g., a new health trend) and students must negotiate new prices based on the changes.

40 min·Whole Class

Think-Pair-Share: Why is it so expensive?

Students identify a product that has recently changed in price (e.g., a new video game, a certain type of shoe). They discuss whether the change was caused by a shift in supply or a shift in demand.

20 min·Pairs

Inquiry Circle: The Power of Marketing

Groups analyze a popular advertisement. They must explain how the ad is trying to increase 'demand' for the product by changing how consumers think or feel about it.

35 min·Small Groups

Real-World Connections

• The Australian government faces scarcity when deciding how to allocate its budget. For example, choosing to invest more in healthcare might mean less funding for education, with the forgone education spending representing the opportunity cost.
• A local bakery must decide what products to bake daily. If they choose to make more sourdough bread, they cannot use that same oven time and ingredients to make croissants, making the croissants the opportunity cost of baking sourdough.
• Families experience scarcity when budgeting household income. Deciding to purchase a new television might mean delaying a planned family holiday, with the holiday being the opportunity cost of the TV.

Assessment Ideas

Exit Ticket

Provide students with a scenario: 'Your school has a limited budget for new equipment. You can either buy new sports gear or upgrade the library computers.' Ask students to: 1. Identify the scarce resource. 2. State the opportunity cost of choosing the sports gear. 3. List one need and one want related to school resources.

Discussion Prompt

Pose the question: 'Imagine you have $20 to spend. What are three different things you could buy? For each option, what is the opportunity cost of choosing it?' Facilitate a class discussion where students share their choices and reasoning, highlighting how different individuals prioritize needs and wants.

Quick Check

Present students with a list of items (e.g., water, a smartphone, a house, a designer handbag, basic food). Ask them to classify each item as a 'need' or a 'want' and briefly justify their classification, checking for understanding of the economic definitions.

Frequently Asked Questions

What is the law of supply and demand?

It is the theory that the price of a product is determined by the balance between how much is available (supply) and how much people want to buy it (demand).

What happens when demand is higher than supply?

When demand is high but supply is low, it creates a 'shortage.' This usually causes the price of the product to go up because buyers are willing to pay more to get what they want.

How can active learning help students understand the market system?

By using 'Marketplace Simulations,' students can feel the pressure of trying to make a profit or get a good deal. This active experience makes the abstract 'laws' of economics feel like common sense, as they see how prices naturally adjust when the number of buyers or sellers changes.

How do businesses influence demand?

Businesses use marketing and advertising to make their products more attractive to consumers. They also use 'sales' to temporarily lower prices and increase the number of people who want to buy.