Online Lesson

Those Golden Jeans

Introduction:

Every day bread arrives at grocery stores, toys are sent to toy stores, and raw materials are delivered at manufacturing facilities. Yet, most of us have little understanding of how people decide how much of a good or service should be produced and at what price. In this lesson you will review the productive resources used to produce goods and services and learn how decisions are made in a market economy through the interaction of the buyers and the sellers. With an understanding of how markets work, you will be better prepared to make decisions as consumers and producers.

Task:

This lesson is designed to review the three types of productive resources - natural resources, human resources, and capital resources - needed to produce goods and services. Students use the internet to identify examples of each: first in the production of pizza, then the mining of gold during the California gold rush.

Process:

Part I:

Many things are needed to make a good or a service. These things are called productive resources.

Productive resources include human resources, natural resources and capital resources.

Human resources are the workers.

Natural resources are things that come from nature and are unchanged by human hands. Examples of natural resources are water, air, trees, minerals, and animals.

Capital resources are man-made tools and equipment used to produce a product. Examples of capital resources are factories, equipment, and tools such as hammers, saws, and computers.

Many productive resources are needed to make pizza.

Go to www.smithsonianmag.com/arts-culture/trends-traditions/art-pizza.html

Use this site to find the following:

1. An example of a human resource in the first paragraph.
2. An example of a natural resource in the fourth or sixth paragraph.
3. An example of capital resources in the fourth paragraph.

Part II:

Complete the activity below:

This is called the Law of Demand.

Why is it that consumers are willing to buy more at lower prices than at higher prices? When prices go up, consumers can't afford to buy as much of a product. With $10.00, you could buy five slices of pizza at $2.00 per slice. If the price per slice goes to $5.00, you can only buy two slices. Price increases are like a reduction in your income. The reverse is true, too. Price decreases are like an increase in income.

As price of a product decreases, that product becomes cheaper relative to other goods and services. Consumers usually substitute relatively cheaper products for more expensive ones. As the price per slice of pizza rises, you might substitute a less expensive good such as a small hamburger.

Assume that somebody is interested in opening a pizza shop near your school. The owners conducted a survey of a sample of students at your school to determine how many slices of cheese pizza they would be willing and able to buy if the shop is open to students after school. The demand schedule looked like this.

The Market Schedule for Slices of Cheese Pizza shows the quantity supplied and the quantity demanded at various prices. This information can be shown as a graph.



Look at the alternative prices for slices of cheese.

The surplus can be eliminated or reduced by a decrease in price. When the price goes down, both consumers and businesses will respond. At a price of $2.00, the quantity supplied would decrease to 800 and the quantity demanded would increase to 400. Consumers are willing and able to buy more at a price of $2.00 and businesses are willing and able to sell more.

At a price of $1.00 consumers want to buy 800 slices of cheese pizza but producers are willing to offer only 400 slices for sale. At a price of $1.00 there won't be enough slices available for everyone who is willing and able to buy. This is called a shortage. A shortage exists in the market when quantity demanded exceeds the quantity supplied at a particular price.

Part III:

You are now going to apply what you have learned to blue jeans.

To learn more about the gold rush and blue jeans, go to these sites:

• www.levistrauss.com/Downloads/History_Levi_Strauss_Biography.pdf
• www.pbs.org/weta/thewest/people/s_z/strauss.htm
• www.ideafinder.com/history/inventions/story013.htm

Mining for gold required many productive resources. To find some of the resources used, go to these sites: www.kidport.com/RefLib/UsaHistory/ CalGoldRush/MiningGold.htm

Look at the pictures.

1. Find an example of a natural resource.
2. Find an example of a human resource.
3. Find an example of a capital resource.

During the Gold Rush, Levi Strauss made durable pants for the miners out of canvas. Later he made the pants from a heavy blue denim called genes in France, which became "jeans" in America. Even today, consumers love to wear jeans.

Print a copy of Activity 2. Use the information from the Market Schedule for Blue Jeans to make your own graph.

Your graph should look like this.



Review your answers.

Conclusion:

Complete Activity 3 and review your answers in class.

Assessment Activity:

Use the information from the table, Market for DVD Players to answer the questions

To produce one DVD player costs ACE Electronics, a major producer of DVDs, at least $179.00. ACE Electronics wants to sell them at $499 each. Is this the price at which they should sell the DVD? Use what you know about markets to explain your answer.