Waltham Public Schools

Basic Economic Concepts

Sept-Oct

1.1 Scarcity 

1.A Describe economic concepts, principles, or models. 

1.2 Resource Allocation and Economic Systems 

1.D Describe the similarities, differences, and limitations of economic concepts, principles, or models. 

1.3 Production Possibilities Curve 

1.4 Comparative Advantage and Trade 

1.5 Cost-Benefit Analysis 

1.6 Marginal Analysis and Consumer Choice 

To understand economics, students need to understand that because most resources are scarce, individuals and societies must make choices. When making rational choices, people do so “on the margin,” taking into account the additional costs and benefits of their decisions. The foundational economic ideas addressed in this unit form the basis for more advanced analysis of consumer and producer behavior that will be developed throughout the course.

Supply and Demand

Oct-Nov

2.1 Demand 

2.2 Supply 

2.3 Price Elasticity of Demand 

2.4 Price Elasticity of Supply 

2.5 Other Elasticities 

2.6 Market Equilibrium and Consumer and Producer Surplus 

2.7 Market Disequilibrium and Changes in Equilibrium

2.8 The Effects of Government Intervention in Markets 

2.9 International Trade and Public Policy

This unit will provide the basis for understanding how markets work by introducing the supply and demand model. Students will build on the concepts of scarcity and choice that were introduced in the first unit and explore the factors that influence consumer and producer behavior. They will learn how the interaction of consumers and producers in competitive markets determines market prices and results in the most efficient allocation of scarce resources. At the end of the unit, students will also begin exploring the effects of government policy on market outcomes, laying the groundwork for additional analysis in the last unit of the course.

Production, Cost, and the Perfect Competition Model

Dec-Jan

3.1 The Production Function 

3.2 Short-Run Production Costs 

3.3 Long-Run Production Costs 

3.4 Types of Profit 

3.5 Profit Maximization 

3.6 Firms’ Short-Run Decisions to Produce and Long-Run Decisions to Enter or Exit a Market 

3.7 Perfect Competition

Unit 3 focuses on firm behavior and culminates with an introduction to the perfect competition model, which will form a basis of comparison for other market structures in the next unit. This unit builds on the idea of supply, which was introduced in the previous unit, and explores in more detail what drives the decisions that firms make. Thinking like a firm may be challenging for students, who are more used to acting as consumers in their everyday lives. Drawing connections to students’ own experiences and carrying out classroom simulations can help bring these concepts to life. Reminding students of the ways in which the behavior of firms is consistent with the ideas of cost-benefit analysis and marginal decision-making addressed in the first unit of the course may also be helpful in elucidating these concepts.

Imperfect Competition

Feb-Mar

4.1 Introduction to Imperfectly Competitive Markets 

4.2 Monopoly 

4.3 Price Discrimination

4.4 Monopolistic Competition 

4.5 Oligopoly and Game Theory

In the real world, firms rarely operate in perfectly competitive markets. In this unit, students will encounter the ways in which imperfectly competitive markets depart from the model of perfect competition introduced in Unit 3. Students will continue to build on their understanding of what it means for a market to be efficient or inefficient as they consider the welfare implications of imperfect markets. In the context of learning about oligopoly behavior, students will be introduced to the field of game theory as an approach to studying strategic decision making.

Factor Markets

Mar-Apr

5.1 Introduction to Factor Markets 

5.2 Changes in Factor Demand and Factor Supply 3

5.3 Profit-Maximizing Behavior in Perfectly Competitive Factor Markets 

5.4 Monopsonistic Markets

By this point in the course, students are familiar with how product markets operate and what drives firm decision making. In this unit, students will apply many of the concepts they learned previously but now in the context of factor markets. Like with product markets, the laws of supply and demand apply to factor markets with an upward-sloping supply curve and a downward-sloping demand curve. In factor markets, firms hire additional resources up to the point at which the resource’s marginal revenue product is equal to its marginal resource cost. This decision is another application of the idea first introduced in Unit 1 of making an optimal choice by equating marginal benefit with marginal cost and firms’ decisions to maximize profits where marginal revenue equals marginal cost

Market Failure and the Role of Government

Apr-May

6.1 Socially Efficient and Inefficient Market Outcomes 

6.2 Externalities 

6.3 Public and Private Goods 

6.4 The Effects of Government Intervention in Different Market Structures 

6.5 Inequality

This unit prepares students to understand the theoretical arguments for and against government intervention in markets and therefore has important public policy applications. Students will examine the conditions under which markets may fail and the effectiveness of government policies that are designed to correct market failures. In exploring the idea of market failures and government interventions to correct them, students will build on their understanding of efficiency and what it means for a firm to produce the socially optimal quantity or not. Students will also learn about how inequality is measured and the sources of income and wealth inequality.