Thursday, September 15th, 2011
Substitutes Everywhere, The Law of Demand
Students shall be able to
explain the centrality of the notion of substitutes to an understanding of market demand, and
list substitutes for a given product.
state the relationship between opportunity cost and demand,
state the law of demand,
define "price rationing," and
explore the wisdom of alternatives to the price rationing system.
List statements of need on the board.
"I need a new car."
"I need an A in this class."
"Every person is entitled to the health care he needs."
"Fire safety requires that there be two exits from each apartment unit."
"Traffic surveys have established the need for two more lanes on I-45."
"There is no substitute for victory."
Discuss what is wrong and misleading about each of the statements.
End with the statement that "THERE ARE SUBSTITUTES FOR EVERYTHING." Explain how the law of demand is dependent on the notion that for anything there is a substitute which will be used when the opportunity cost of a thing is high enough.
Develop group responses to the questions on "Opportunity Costs and Demand."
Monitor and adjust as needed.
TEKS involved: 1B, 3A, 5A, 7A, 10A, 10B, 15A, 16A, 20A, 20B, 21A, 21B, 23A, 23B, 24A, 24B, 25A