Economics

and You
By
Author: Kristen Girard Golomb
Editors: Mary Dieterich and Sarah M. Anderson
Proofreader: Margaret Brown

COPYRIGHT 2012 Mark Twain Media, Inc.

ISBN 978-1-58037-664-8

Printing No. 404168-EB

Mark Twain Media, Inc., Publishers

Distributed by Carson-Dellosa Publishing LLC

The purchase of this book entitles the buyer to reproduce the

student pages for classroom use only. Other permissions may be
obtained by writing Mark Twain Media, Inc., Publishers.

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Economics and You
Table of Contents
Introduction..................................................1
What is Economics?....................................2
Goods and Services....................................3
Supply and DemandPart 1.......................4
The Chicken Farm.......................................5
Supply and DemandPart 2.......................6
The New and Improved Chicken Farm........7
Case Study: Auctions..................................8
Case Study: Write Your Own........................9
More Economic Terms...............................10
Case Study: The Lemonade Stand............11
Money in the United States.......................13
Money Research Project...........................14
Banking and Interest..................................15
How to Calculate Interest..........................16
The Federal Reserve.................................17
The Federal ReserveQuestions.............18
Federal Reserve Banks.............................19
Flow Chart: The Federal Reserve..............20
Inflation......................................................21
InflationQuestions..................................22
Inflation Case Study: Real Estate..............23
What Did Things Cost?..............................24
Case Study: Menus...................................25
Economic Crossword Puzzle.....................26
Matching Quiz............................................28
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Table of Contents
Consumer Simulation................................29
Career Cards........................................30
Welcome to the Working World............32
Checks.................................................33
Application for a Checking Account......34
Blank Checks.......................................35
Deposit Slips........................................36
Checkbook Register.............................37
Money Cards........................................38
How to Balance Your Checkbook.........40
Bank Statement....................................41
Credit Cards.........................................43
Credit Card Application........................44
Credit Card Statement.........................45
Buying a Car........................................46
Car Loan Application............................48
Apartment Hunting...............................49
Apartment Application..........................50
Apartment Move-in Costs.....................52
What Do You Need?.............................53
Comparison Grocery Shopping............55
Taxes and W-2 Forms..........................56
Tax Form..............................................57
Answer Keys..............................................58
Bibliography...............................................62
Photo Credits............................................ C3
ii
Economics and You Introduction

Introduction

Economics and You explores real-world ap-

plications of economics in a way that is relevant to
students today. The book breaks down topics such
as the Laws of Supply and Demand into easy-to-
understand examples that teachers, parents, and
students can review together at home or school.

The easy-to-follow format of Economics and

You facilitates planning for the diverse learning styles
and skill levels of middle-school students. This book
is divided into two parts. The first is a step-by-step
introduction to the basic principles of economics.

The second is an in-depth, real-life simula-

tion activity designed to reinforce the economic
principles and basic mathematics concepts taught
previously while introducing the students to the
consumer world.

The economic activities come in many

formats. Vocabulary and basic economic laws are
introduced in bold in every lesson. Case studies,
articles, graphic organizers, questions, puzzles, lists, and other types of activities are used to
spark student interest. Many of the materials are suitable for whole-class use on the overhead
projector. An emphasis is placed on using math skills in real-life situations.

In todays challenging economic times, ensuring that students understand the value
of a dollar and what it can buy is vital to their long-term financial health. Economics and You
helps to lay the groundwork for students to grow into financially responsible adults.

404168-EB Mark Twain Media, Inc., Publishers 

Economics and You Supply and DemandPart 1

Supply and DemandPart 1

Supply is the degree of availability of an item, or, in simpler terms, the number of items
ready for sale. For example, the supply of airplane tickets to Anchorage, Alaska, is the number
of seats available on all of the planes that fly there each day. Two planes fly into Anchorage
each day, and they can hold 56 passengers each. This means a total of 112 passengers can
fly to Anchorage each day. Therefore, the supply is 112 seats.

= 112 seats (supply)

Demand is the usability of the item or how many people want to buy it.

To continue the example, the demand is the number of people who want to fly to Anchor-
age each day. If 100 people want airplane tickets to Anchorage each day, then the demand is
100.

x 100 = 100 passengers (demand)

If supply is greater than demand (more seats available than people wanting to buy
them), it is called a surplus. Surplus usually causes the price of the item to go down. When
demand is greater than supply (more people want to go to Anchorage than there are seats
available), then you have a scarcity. Scarcity usually causes the price of the item to go up.

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Economics and You The Chicken Farm
Name: Date:

The Chicken Farm

There is one chicken farm in Cholesterolville. Farmer Yolkman owns 10 chickens. Each
hen lays about five eggs per week. Farmer Yolkman sells eggs to 10 families. Each family
needs one dozen eggs per week.

Use the words high, low, surplus, and scarcity to fill in the blanks. The words may be
used more than once.

1. Approximately how many dozen eggs will the chicken farm be able to supply each week?

Demand will be for these eggs, so eggs will be in .

This will cause the price of the eggs to be .

Assume that Farmer Yolkman bought more chickens and expanded his chicken farm.
He now has 30 laying hens. He still supplies eggs to 10 families who each demand one dozen
eggs a week, and each chicken still lays five eggs a week.

2. Approximately how many dozen eggs will the chicken farm be able to supply per week

now?

Demand for these eggs will be , supply will be in , and

cost will be .

404168-EB Mark Twain Media, Inc., Publishers 

Economics and You Supply and DemandPart 2

Supply and DemandPart 2

Sounds pretty simple so far, right? Well, there are just a couple of small catches. Read
on. . . .

As the price of an item goes up, the supply of that item will also go up. This is
called the Law of Supply.
Think about this. When tickets to Anchorage are scarce, the price will rise. We learned
that earlier. But as the price goes up, more airlines become interested in scheduling flights to
Anchorage. They see how much other airlines are charging to get there and become interested
in flying there themselves to make more money. Therefore, more companies will schedule
flights to Anchorage. There will be more sellers of flights to Anchorage, which will lessen the
demand. Price goes up and supply goes up.
Similarly, lets look at the Law of Demand. This principle states that as the price goes
down, the demand will go up.
Back to Anchorage. The new companies flying into Anchorage over-satisfy the demand
for tickets, causing a surplus. This surplus causes companies to lower ticket prices in an attempt
to lure customers to buy tickets with their airlines. As the price of the tickets goes down, what
would you expect to happen? Right! More people will want to buy tickets because it becomes
a better valuea deal. But as the demand rises, fewer companies can afford to fly at this
price, and the supply goes back down. Price went down, demand went up, and supply went
back down.
Ugh! What a vicious circle! To review:

Supply = The degree of availability of an item (whats for sale)

Demand = The usefulness of that item (who wants to buy it)
Law of Supply = As the price increases, the supply increases. This means
more sellers, yet fewer buyers.
Law of Demand = As the price decreases, the demand increases. This means
more buyers, yet fewer sellers.
PRICE
PRICE

SUPPLY DEMAND

404168-EB Mark Twain Media, Inc., Publishers 

Economics and You The New and Improved Chicken Farm
Name: Date:

The New and Improved Chicken Farm

With one chicken farm in Cholesterolville and 10 chickens,
Farmer Yolkman can produce approximately four dozen eggs per
week. (Each chicken lays five eggs per week.) He sells one dozen
eggs each to 10 families. Demand for these eggs will be high, caus-
ing the cost of the eggs to be high as well. Eggs will be scarce.

Answer the following questions in complete sentences.

1. Now that the cost has gone up, what will happen to the number
of chicken farms in Cholesterolville? Why?

2. What will this do to the supply of eggs?

3. How will this affect the cost of and demand for eggs?

4. What will happen to the many chicken farms in Cholesterolville (the supply) as a result
of the change in price?

5. Explain why this is a circular cycle.

404168-EB Mark Twain Media, Inc., Publishers