Economics in Business

Whāinga ako: Lesson Goals

Students will grasp fundamental economic principles involved in micro and macro economics, such as supply and demand.

Teacher note: Some concepts are quite tricky in this lesson. If you need to focus on two things-

Teach them the words micro and macro. Just the meanings, you can relate this to economics but also that the words are used in science etc.
Go through the budgeting task. Spend a lesson talking through the process.

Kupu matua - Keywords

Economics is the allocation of resources available to fulfill people's needs and wants for goods and services...

Not all wants can be fulfilled and so decisions need to made about the allocation of resources. Economics is the study of how countries and individuals make these decisions.

Macroeconomics is the study of the OVERALL economy. I.e. decisions made by governments, national income, employment and unemployment stats etc.
(macro means big)

Microeconomics is the study of how consumers and businesses make economic decisions
(micro means little)

Mahi - work

An example of Microeconomics/Ōhanga Whāiti

Supply and demand of toy fads

This is an important concept in economics that explains how the price and quantity of goods and services are decided in a market. Here's a simple explanation:

Supply: This is the quantity of a product or service that producers are willing and able to offer for sale at different prices. Typically, as the price of a product increases, the quantity that producers are willing to supply also increases.

Demand: This is the quantity of a product or service that consumers are willing and able to purchase at different prices. Usually, as the price of a product decreases, the quantity that consumers are willing to demand increases.

Supply and demand

Initial Price and Low Demand:

The Hudsucker Corporation set the hula hoop price at $1.79, but no one bought it, showing there was little demand.

Price Drops:

The company lowered the price to $1.49 and even less, but still no one was interested. This shows that lowering prices doesn’t always increase demand.

Consumer Behavior Change:

When a boy starts playing with a hula hoop, other students notice and demand suddenly increases. This shows how consumer behavior can change demand.

Demand Shift:

The excitement from the students leads to more people wanting hula hoops, increasing demand at all price levels.

Supply Response:

To meet the new demand, the toy store orders more hula hoops and raises the price to $3.99.

An example of Macroeconomics/Ōhanga Whārahi

A global financial crisis: The Great Depression

If we think of the worldwide economy as a rollercoaster, we can compare the high points of the ride to times when people are making a lot of money, the economy is booming (as they say) and things are going well for individuals- jobs are available and buying essentials isn't too bad for most people.

Then there's the other extreme where things get really low, there is a lot of uncertainty. In these times people struggle to pay for basic necessities, business does not thrive and people lose their jobs.

In the 1920s, the economy was like a roller coaster climbing slowly to its highest point. During this time, the stock market was going up, and people were investing money, hoping to make a profit. It was like just the exciting part when the coaster is climbing up.

But then, suddenly, it all crashed down, just like when the roller coaster takes that sudden drop. This marked the beginning of the Great Depression in 1929 and it was a severe worldwide economic crisis.