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What, How and For Whom to Produce?
by Krystyna Brzaklik (Poland)
LESSON DESCRIPTION
Students produce badges as rewards for the best economists in the class.
Through this production activity, they learn how command and market economies
answer
the basic economic questions: What to produce? How to produce? For whom
to produce?
AGE LEVEL
10-12 years old
CONCEPTS
- Productive resources
- Command economy
- Market economy
- Basic economic questions
CONTENT STANDARDS
Students will understand that different methods can be used
to allocate goods and services. People, acting individually or collectively
through government,
must choose which methods to use to allocate different kinds of
goods and services.
BENCHMARKS
There are essential differences between a market economy, in which
allocations result from individuals making decisions as buyers and
sellers, and a command
economy, in which resources are allocated according to a central
authority.
People in all economies must answer three basic questions: What goods and
services will be produced? How will these goods and services be produced? Who
will consume them?
OBJECTIVES
- Define an economic system as a way people organize the production,
distribution, and consumption of goods and services.
- State and explain
the three basic economic questions every economic system must answer:
What to produce? How to produce? For whom to produce?
- Describe the basic characteristics of market and command economies.
TIME REQUIRED
One class period
MATERIALS
- copy of Activities 1, 2, and 3 for each group
- 2 sheets of white paper, 1 sheet of colored paper, pencil, magazine
with colorful pictures, glue, 2 napkins, 2 paper plates, 5 safety pins, scissors,
10 straight pins, and a blue, black, and red marker for each group
- transparency of Visual 1
PROCEDURE
- Tell students they will produce "good-economist badges" that
will be distributed to students who meet certain criteria.
- Divide the class into groups of 6 - 7 students. Explain that each group
represents a country and its economy. Have each group name its
country and choose a spokesperson for the country.
- Distribute a copy of Activity 1 and the resources required for producing
good-economist badges to each group: 2 paper plates, 1 sheet of
white paper, 1 sheet of colored paper, 10 pins, a magazine with colorful
pictures, and a
black marker.
- Tell students to read the instructions. Explain that the first production
round will last 5 minutes. Begin the round.
- At the end of 5 minutes, ask the spokesperson for each group to display
the group’s products. Collect all badges.
- Have students raise their hand if they think they are good economists
and should, therefore, receive a badge.
- Explain that you have already decided how the badges will be distributed.
You will keep half the badges because you are the best economist
in the classroom, and you will distribute the rest of the badges to
students in the class.
- Begin distributing badges to students based on any criterion you choose.
For example, give them to students with blue eyes, students sitting
in the first row, students with dark hair, and so on.
- Discuss the following.
- Are you satisfied with the results of this activity? (No.) If not,
why?
(The teacher made all of the decisions about what would
be produced – badges,
how the badges would be produced, and who would receive the badges.
The teacher kept too many badges. Even though students produced the badges,
some students
didn’t receive a badge.)
- Were you able to design the badges? (No.) Why?
(The teacher decided what the badges should look like, and
we had to follow that design.)
- Who decided what resources
would be used to produce badges?
(The teacher provided the
resources and decided how they
would be used.)
- What problems occurred in the production process?
(Groups lacked some resources, such as scissors; they had
excessive amounts of
other resources; some resources, such as paper plates, weren’t useful
in producing badges; there was limited output because each group
was instructed to only
produce six badges.)
- What economic incentives influenced
the production teams?
(There were no incentives.)
- Did
the lack of economic incentives affect the quality of
the final product?
(Some badges were poorly made.)
- What
decisions were the members of each group able to make
about production and distribution
of badges?
(how to divide the labor)
- Define an economic system as the way people decide to organize production,
distribution, and consumption. The decisions people must make
about production, consumption, and distribution are: What to produce?
How to produce? For whom
to produce? Explain that there are different types of economic
systems. Each type of economic system answers these three questions
differently.
- Display Visual 1. Ask students how these three questions
were answered in the badge activity. As the students respond,
record the information on Visual
1. (In each case, the answer is that the teacher made the decision.)
- Explain that when a central authority makes the decisions about what,
how, and for whom to produce, the economic system is called a planned
or command
system. In this production round, the teacher was a central authority making
decisions about what, how, and for whom to produce, so the class had a command
economy. Write the word "command" in column two next to "Type
of Economic System."
- Explain that in the next round, members of the
groups will be able to make decisions about the production and distribution
of badges.
- Ask students what types of decisions they must make.
(What to produce – what
the badges look like; How to produce – what resources to use, how many
to produce; and For whom to produce – who will receive the badges after
they have been produced.)
- Remind the students that the three basic questions every economic system
must answer are: What to produce? How to produce? For whom to produce?
- Distribute
a copy of Activity 2 to each group. Ask students in each group to discuss
what they want the group’s badges to look like. Explain that
the group members should consider the available resources and decide which
six resources they will use to produce badges.
- Explain that groups will
have 10 minutes to decide the following questions and complete
Activity 2.
- What to produce? (What will the badges look like?)
- How to produce? (Which resources to purchase? How to use the labor resources?)
- For whom to produce?
- Distribute the resources that each group has chosen, and allow 10
minutes for students to work.
- At the end of 10 minutes, display Visual 1 and ask the class who made
the three decisions on the chart. Record their answers on Visual
1.
(In this case, the students should respond that the group or the students
made
the decisions.) Discuss the following.
- Why are the products produced
in round 2 different from those produced in round 1?
(In round 2, the producers had input about how the badges would
look. The producers wanted to produce something that looked
nice and that other people would want to wear so consumers would
buy their badges.)
- Who decided which resources each group used
to produce badges?
(group members – producers)\
- How many badges
were produced in each group?
(More than in the first round.)
- Why were more produced?
(No quota or limit was established.)
- Who will receive the badges produced by your group?
(those
who want the badges to wear and are willing to
buy the badges)
- What economic incentives influenced
the production teams?
(hope of selling the badges to
consumers, being able to make choices)
- How
did the presence of incentives influence production quality
of the final product?
(The badges were high quality, unique,
and attractive.)
- Remind students that in a command economy distribution decisions are
made by a central authority. In the class example, the teacher decided
who received
the badges. Explain that in a market economy, people (producers and consumers) make allocation decisions.
- Explain that when the producers and consumers
make decisions about what, how, and for whom to produce, the society
has a market economy. In this round
of production, the class had a market economy. Write the word "market" in
column 2 next to "Type of Economic System."
- Ask the students how
the three basic economic questions were answered in this activity.
(producers and consumers) As the students respond, record
the information on Visual 1.
CLOSURE
Display Visual 1 and ask the following questions.
- What is an economic system?
(the way in which production, consumption,
and distribution of goods and services are organized)
- What are the principal questions that every economic system must answer?
(what, how, and for whom to produce)
- Who makes decisions concerning the types of goods and services produced,
the way in which goods and services are produced, and who receives
the goods and services produced in a command economy?
(central planning
authority)
- Who makes decisions concerning the types of goods and services produced,
the way in which goods and services are produced, and who receives
the goods and services produced in a market economy?
(producers and
consumers)
ASSESSMENT
Distribute a copy of Activity 3 to each person. Have students read
the instructions and decide if the statements are true or false.
The correct answers for the assessment are: 1) true 2) true 3) false 4) true
5) false 6) false 7) false 8) true 9) true
EXTENSION
- In history, students may conduct research to determine how other
cultures or civilizations (Chinese, Egyptian, Ancient Greece)
answered the basic economic
questions.
- In civic education, students may find newspaper articles with information
about elements of command and market systems within their countries’ economies.
They can underline sentences that exemplify answers to the three
basic questions.
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