thank you for participating in the ja economics 1: what is economics chapter overview economics is a...

Thank you for participating in the JA Economics program. As a participant in JA Economics, you are joining other teachers and

business volunteers from across the United States in providing high school students a unique educational experience. JA Economics

brings students into regular contact with a representative of the local business community. It also combines the content of

traditional high school economics courses with opportunities for students to participate in computerized simulations where they can

test their knowledge.

We know that sharing with the students will be a rewarding experience for you. To support you in the classroom, we’ve created

this JA Economics Activity Supplement to help you prepare for your

time with the students. Through this supplement we are targeting the activities that help to provide hands-on learning opportunities to

supplement the student’s classroom learning.

These activities are: Chapter 1: What is Economics?

Chapter 3: Demand Chapter 4: Supply

Chapter 5: Market-Clearing Price Chapter 6: Consumers, Savers, and Investors

Chapter 7: The Business of Free Enterprise Chapter 8: Financing a Business

Chapter 9: Production and Productivity Chapter 11: Competition Among Businesses

Chapter 13: Money and Financial Institutions

We will keep in touch with you throughout your time in the

classroom and ask you to share your ideas and experiences with us. We evaluate and revise our programs regularly in response to

comments from you and the classroom teachers.

Thank you once again for volunteering to be a positive role model for our area youth. We look forward to hearing from you and

working with you.

Chapter 1: What is Economics

Chapter Overview

Economics is a social science that studies how people, acting individually and in groups,

decide to use scarce resources to satisfy their wants. In their classroom activities and

readings the students will explore the following types of concepts:

Describe the nature of human wants and how they are satisfied.

Identify and define the four factors of production.

Define the meanings of scarcity and opportunity cost.

Describe the choices businesses face and a major goal of business.

Identify the basic economic decisions facing all societies.

Key Terms

Economics – A social science that studies how people, acting individually and in groups, decide to use scarce resources to satisfy their wants.

Scarcity – An inequality that exists between wants and the resources available to satisfy them.

Opportunity cost – The highest valued alternative given up as a result of making a choice.

Session Outline

Introduction

Greet the students and introduce yourself. Share with the students information

about your career and what your business does.

Review the Key Terms for Chapter 1

Activities

Introductions – see pages 1 and 2 in the Guide for Volunteers.

Applying Economics – see page 2 in the Guide for Volunteers. You may also wish

to use the Chapter 1 Student Handout on the next page. If so, you will need to

make a copy for each student in your class.

Summary and Review

Review the Key Terms for Chapter 1.

Thank the students for their participation.

Notes:

Chapter 1: What is Economics Student Handout

Typical Day Worksheet

Schedule 1 Schedule 2

6:00 am

7:00

8:00

9:00

10:00

11:00

12:00 pm

1:00

2:00

3:00

4:00

5:00

6:00

Things I do not get done in a typical day:

1. ____________________________________________________________

2. ____________________________________________________________

3. ____________________________________________________________

Chapter 3: Demand – Two Options (Option #1)

Chapter Overview

In economics, demand is the various qualities of something a person is willing and

able to buy at many different prices at a particular time. In their classroom activities and readings the students will explore the following types of concepts:

Explain the role prices play in a market economy.

Define demand and describe how it illustrates the price effect.

Explain why people buy more of something at lower prices and less at higher prices.

Key Terms

Demand - Quantities of a particular good of service consumers are willing and able

to buy at different prices at a particular time.

Price effect – The inclination of people to buy less of something at higher prices

than they would buy at lower prices.

Session Outline

Introduction

Greet the students.


Discuss why people trade. People trade voluntarily because they believe they

will make some sort of gain.

Activities

Option 1: Why People Trade – see pages 13 – 15 in the Guide for

Volunteers.

During your explanation of this class simulation, you will want to introduce

the concept of Utility as a measurable level of satisfaction.

In lieu of purchasing a small item for each student in the class you may wish

to cut out the items on the next page, place them in an envelope and then

place the Why People Trade label on the outside of the envelope. This will

significantly reduce your prep time and allows the students a place to track

utility.

Summary and Review



Notes:

Kitten Video Game System Bouquet of Flowers

Car Wax Basketball Designer Pen and

Pencil Set

Ski Vacation Sweater A Star or Planet

named after you

Bike Movie Passes for Four School Ring

Diamond Ring An Extra Large Pizza Letter Jacket

Season Tickets to the Colts Bowling Ball A Giant Candy Bar

TV Ten Pounds of Potatoes Book or Magazine of the

Month Subscription

Meal at your favorite

Restaurant Dirty Diaper A Pack of Gum

Manicure Laptop Computer Today’s Newspaper

Guitar Lessons Cell Phone A Key Chain

Why People Trade

Instructions: After each round rate the utility of the item in your envelope on a scale of 1 (low) to 10 (high). Remember, utility is your measurable level of satisfaction.

Round Utility Rating (1 to 10)

1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Why People Trade



1

2

3

4

5

Chapter 3: Demand – Two Options (Option #2)

Chapter Overview

In economics, demand is the various qualities of something a person is willing and

able to buy at many different prices at a particular time. In their classroom activities

and readings, the students will explore the following types of concepts:

Explain the role prices play in a market economy.

Define demand and describe how it illustrates the price effect.

Explain why people buy more of something at lower prices and less at higher prices.

Key Terms

Demand - Quantities of a particular good or service consumers are willing and able

to buy at different prices at a particular time.

Price effect – The inclination of people to buy less of something at higher prices

than they would buy at lower prices.

Session Outline

Introduction

Greet the students.


Activities

Use the “Demand in Auction” activity on the following pages.

Summary and Review


Notes:

Chapter 3: Demand in Auction

OVERVIEW: Students participate in a series of auctions to purchase inexpensive candies. They develop demand schedules, plot demand curves, and explore factors that could affect demand for particular products.

KEY TERMS: Demand - Quantities of a particular good or service consumers are willing and able to buy

at different prices at a particular time.

Price Effect - The inclination of people to buy less of something at higher prices than they

would buy at lower prices.

MATERIALS NEEDED: Assorted candy (to avoid purchasing candy, pictures of candy work as well)

30 copies of Auction Record of Bids handout

2 Copies of Supply/Demand graph for each group (total of 16 copies)

INTRODUCTION: Inform the students the types of goods or services your firm produces and sells. Explain

that one of the challenges of being successful in business is setting a price that consumers

will find attractive. This means understanding the demand for the products you are selling.

Unfortunately, businesses seldom know for certain what the demand for their products is

likely to be. This is one reason business is risky!

Explain that today you will be conducting an experiment to learn more about demand and

how it affects business decisions. Define demand. Demand is the quantities of a particular

good or service consumers are willing and able to buy at different prices at a particular

time.

ACTIVITY:

Display the three types of candy you will be offering for sale. Do not display your full supply

(you may wish to limit the supply later in the exercise). Explain that you will be selling the

candy in a type of auction.

Divide the students into groups (4-6 per group). Distribute the Auction Record of Bids

handout to each group (you may want to have two copies per group ready, but only

distribute one at a time to each group).

Have each group designate 1 student as the record keeper to keep track of money assigned

to the group.

Assign each group an amount of money they have to spend as follows:

Group 1: $5

Group 2: $20

Group 3: $15

Group 4: $20

Group 5: $25

Group 6: $30

*Note: If there are not enough students for six groups, pick from the amounts shown and

assign one amount to each group. Make sure each class includes a group that has $5 and a

group that has $30 to make the auction interesting.

Tell each group they may buy as many items as they can afford at the prices you offer while

supplies last. Let them know that you will be selling the three different types of candy (or

items if applicable). Explain that in most auctions, the price starts low and buyers bid the

price up. In this auction, you will start at a high price and work down. Consumers/buyers

will need to purchase the candies they want at the high price or risk losing them to another

buyer.

Offer the candy/items for sale you think the students will want least at $30 per piece.

Remind students that the other candies/items will be on

sale later.

• Note on the board the numbers of pieces/

items sold at $30.

• Continue the auction at lower and lower prices.

• Drop the price in $5 increments to $15, then you can

continue in smaller increments. Use your judgment.

Remember to record the number of candies sold at each price.

When the candy/item is sold or when the students stop

spending, point out that you have created a demand

schedule.

Use the demand schedule to calculate the cumulative quantity demanded at each price.

Point out the price effect. Consumers buy more at lower prices. Distribute the graph paper

handout, and ask the students to graph the demand using cumulative quantity. Consumers

who will buy at a high price will certainly buy at the low price. If appropriate, plot your own

curves on the overhead projector or board.

Repeat the exercise with the two other types of candy/items. Develop separate demand

schedules, calculate cumulative quantity demanded, and plot separate demand curves.

Discussion: Compare the three demand curves.

• Was the demand for each type of candy/items the same?

• Was the price effect different for different candies/items? (If time permits, calculate the

impact of

price changes on total revenue for different candies/items).

• What factors contributed to the differences? Consumer tastes? The availability of

substitutes? The availability of money/income?

• What happens if a firm sets prices too high? What happens if it set prices too low?

WORKPLACE APPLICATION: • Take a moment to share, if possible, an example from your workplace.

• Explain how your firm gathers data about consumer preferences as it develops and prices

its products (if applicable).

SUMMARY: Consumers purchase more at lower prices, but their individual purchasing decisions are

influenced by personal preferences, the availability of funds, and the availability of

substitutes. Learning about consumer demand is important to businesses.

Sample Demand Schedule

Quantity Cumulative

Price Purchased Quantity

$30 1 1

$25 2 3

$20 4 7

$15 6 13

$10 10 23

$5 14 37

Chapter 3: Demand in Auction

Auction Record of Bids

Round 1 Bids

Amount of Dollars to Spend:

______________

Group bid: _________ Group bid: _________ Group bid: _________





Round 2 Bids


______________






Round 3 Bids


______________






Chapter 4: Supply

Chapter Overview

Supply is the various quantities of a product that producers are willing and able to

sell at different prices at a particular time. In their classroom activities and readings the students will explore the following types of concepts:

Describe how supply is related to opportunity cost.

Define supply and explain the price effect related to supply.

Explain why producers want to sell more of something at higher prices and less at lower prices.

Key Terms

Supply - Quantities of a good or service that producers are willing and able to sell at

different prices at a particular time.

Marginal cost – The additional cost of increasing one unit of production.

Session Outline

Introduction

Greet the students.


Activities

T-Shirt Supply Role-Play – see pages 18 - 24 in the Guide for Volunteers.

Summary and Review



Notes:

Chapter 5: Market-Clearing Price

Chapter Overview

A marketing-clearing price exists when the amount of a product that buyers want to

buy at a given price is the same amount that sellers want to sell at that price. In

their classroom activities and readings the students will explore the following types of concepts:

Describe how competitive markets “clear” the amount buyers want to

purchase with the amount sellers want to sell.

Explain the nature of shortages and surpluses and how market competition

eliminates them.

Describe how market-clearing prices motivate people to produce goods and

services.

Describe the kinds of changes that occur in demand and supply, and how these changes affect market-clearing prices.

Key Terms

Market-clearing price – the price at which the amount supplied is equal to the

amount demanded.

Session Outline

Introduction

Greet the students.


Activities

NFL Draft – see following pages for Activity Replacement.

Summary and Review



Notes:

Chapter 5: Market-Clearing Price Activity Replacement Activity Separate the class into 10 teams. Give each group a different Football Team Sheet. Let

them know that by receiving the Team Sheet they become owners of a particular team.

Point out that on each Team Sheet is an amount of money the team has at their disposal.

Supply is scarce and demand is high; therefore, the prices or wages for the players will be

bid up. Make sure students know they do not have to use all their available money and that

they are not to disclose their team’s information to other teams. Review and discuss the 12

players as indicated on each Team Sheet, their qualities and accomplishments. Start the

bidding for each player and document the amount paid for each player. After the bidding is

over, tell the class how the players did (refer to the Player Results). Chart the losses and

profits each team has made.

Summary The activity illustrates the various aspects of demand. Once demand has reached a certain

level, overall demand decreases as many teams will drop out of the market due to scarce

resources (money) available to pay for players. The definition of demand includes that

consumers must be able to pay for it not just want it. As teams meet their needs, the

overall demand also decreases for the scarce resources still available as fewer teams who

are able to pay for players participate in the market. As the supply dwindles and fewer

players are available, teams willing and able to participate are willing to pay higher prices

for players.

Player Results

Mark “Mad Dog” Maglowski Had a super year and led his team to the playoffs. Grossed

$10 million.

Sam Tosser Led his team to the Mega Bowl championship. Grossed $11 million.

Sid Gash Became very popular with the other players and fans. Had a mediocre year

himself but the team finished above .500 and broke even financially.

Yancy Yarborough Broke on the scene as the next great wide receiver in the IFL. Had a

fabulous year and made the All-Star team. Grossed $4 million.

John Young Had a great year, but let’s face it, fans don’t pay to watch defensive lineman.

Your team broke even on this deal.

Joe Strong The guy added leadership and poise to your team. Grossed $1 million.

Rex Johnson Started the year well, but blew his knee out and missed 11 games. You lost

$4 million.

Hans Clausing Continued his winning ways and helped you qualify for the playoffs, which

made your team a cool $2 million.

Butter Beans Butter weighed into training camp at over 400 pounds and couldn’t pass a

physical to play. Out all year you lose $5 million.

Baron Freeman What a find! Baron leads the league in passing and is named an All-Star.

Grossed $7 million.

Pete Plaxico Pete’s back bothers him all year and he doesn’t play well. You lose $3 million.

Brian Kauffman His off-field problems surface again; and, he spends half the season in

jail for stealing hats at Wal-Mart. You lose $2 million.

Chattanooga Choo-Choos

Franchise History: You are one of the original teams in the league. You have

built a rich tradition and your loyal fans expect a championship every year. Last year you were the Mega Bowl runner-ups.

Needs: Your offense is fantastic and everyone on that side of the ball is

returning from last year. However your defense leaves much to be desired. You got beat in the Mega Bowl by the Lansing Lugnuts because your defense

couldn’t stop a thing.

Available Money: $1.5 million

AVAILABLE PLAYERS

Mad Dog Maglowski Sam Tosser “Slammin” Sid Gash

Linebacker (5 years), Has led the league in

tackles for the past four

years

Quarterback (8 years), Last year’s

league MVP, Winner

of 3 Mega Bowl’s

Running Back (13 years), May be the

best back ever in the

IFL, Twilight of his career, Great leader.

Yancy Yarborough Jumbo John Young Joe Strong

Wide Receiver (1 year),

Fastest man in IFL, 55

catches for 732 yards last year.

Offensive tackle (4

years), Thought to be

best pass blocker in the game

Center (15 years),

Strongest man in the

league, Excellent run blocker, 13 All Star

Bowls

Rex Johnson Hans Clausing Butter Beans

Cornerback (3 years),

Mega Bowl champ last year, Led league in

interceptions.

Place Kicker (17

years), Very accurate, Great under

pressure.

Defensive Tackle (6

years), Overweight, Proven winner, Prone

to knee injuries.

Baron Freeman Pete Plaxico Brian Kauffman

Quarterback (2 years),

Backup QB (2 years), Anxious to prove himself.

Running Back (4

years), Sat out last year with back injury,

former Heisman trophy winner.

Linebacker (1 year),

Many off-field problems, Great speed.

Memphis Maulers

Franchise History: Last year was your first year in the league. You had a

tough season, only winning two games. You have a bunch of talented, young players, but they are still learning to play the professional game. Your fans

are hoping for a better season!

Needs: Leadership. It seems like your players are in the newspapers more for trouble they cause than what they do on the field. You could really use a

proven leader who knows how to win. Maybe he can straighten the young talent out.

Available Money: $5 million

AVAILABLE PLAYERS


Linebacker (5 years),

Has led the league in tackles for the past four

years

Quarterback (8

years), Last year’s league MVP, Winner

of 3 Mega Bowl’s

Running Back (13

years), May be the best back ever in the



Wide Receiver (1 year), Fastest man in IFL, 55


Offensive tackle (4 years), Thought to be


Center (15 years), Strongest man in the


Bowls




interceptions.

Place Kicker (17


pressure.

Defensive Tackle (6


to knee injuries.




Running Back (4





Spokane Spartans

Franchise History: Your team has always been known as lovable losers. You

change coaches like most folks change their underpants. This year another new coach has been hired. Your fans are so embarrassed they wear masks

to your games to hide their faces.

Needs: What don’t you need? Last year you were once again the league laughing stock. Anything would be an improvement. The more good players

you can find the better.


AVAILABLE PLAYERS




years


league MVP, Winner

of 3 Mega Bowl’s








Offensive tackle (4



Center (15 years),



Bowls




interceptions.

Place Kicker (17


pressure.

Defensive Tackle (6


to knee injuries.




Running Back (4





Lansing Lugnuts

Franchise History: You have owned the team for three years. Hard work and

careful management led you to the Mega Bowl Championship last year. Life as the champs is good. Repeating is tough, but you like to win!

Needs: With such a great ending to the season your All-Star kicker, Rick

Bangs and great quarterback, Brett Strongarm both retired. They will both be tough acts to follow.


AVAILABLE PLAYERS




years


league MVP, Winner

of 3 Mega Bowl’s








Offensive tackle (4



Center (15 years),



Bowls




interceptions.

Place Kicker (17


pressure.

Defensive Tackle (6


to knee injuries.




Running Back (4





Lincoln Leopards

Franchise History: Your team is made up of lots of aging veterans. They

know how to win and have a great reputation around the league. Your coach has been with the team 10 years and has always coached the team to a

winning season.

Needs: Young blood. The next three years will see a bunch of your starters retiring. The new guys don’t have to play right away, but they have to be

willing to learn from the veterans. This is a great opportunity for the young players who like to win.

Available Money: $700,000

AVAILABLE PLAYERS




years

Quarterback (8


of 3 Mega Bowl’s

Running Back (13










Bowls




interceptions.

Place Kicker (17


pressure.

Defensive Tackle (6


to knee injuries.




Running Back (4





Reno Rustlers

Franchise History: Before last year, the wins have been few and far

between. In last year’s draft you selected Mitch Rogers, the hottest young quarterback in the league. He led your team to a franchise record 10 wins

last year almost single-handedly.

Needs: Mitch Rogers is awesome. If he would have had good receivers last year you believe you could have made it to the Mega Bowl. The fans are

back in the seats and expect big things this year. Speed wins in this league and you could use some at the receiver position.


AVAILABLE PLAYERS




years

Quarterback (8


of 3 Mega Bowl’s

Running Back (13










Bowls




interceptions.

Place Kicker (17


pressure.

Defensive Tackle (6


to knee injuries.




Running Back (4


former Heisman

trophy winner.



Las Vegas Gamblers

Franchise History: Your team is known as the bad boys of the league. Your

defense hits hard and makes no apologies for the way they play. Your coach gives the players free range and they are known to live it up in Las Vegas.

Needs: You are always looking for guys who fit your hard-hitting mold. One

of your linebackers, Neal Wilkins had a bad knee injury last season and may not be back for another year. You could also use a good back-up running

back.


AVAILABLE PLAYERS



Has led the league in

tackles for the past four years

Quarterback (8

years), Last year’s

league MVP, Winner of 3 Mega Bowl’s

Running Back (13

years), May be the

best back ever in the IFL, Twilight of his

career, Great leader.



Fastest man in IFL, 55 catches for 732 yards last

year.

Offensive tackle (4

years), Thought to be best pass blocker in

the game

Center (15 years),

Strongest man in the league, Excellent run

blocker, 13 All Star Bowls


Cornerback (3 years), Mega Bowl champ last

year, Led league in interceptions.

Place Kicker (17 years), Very

accurate, Great under pressure.

Defensive Tackle (6 years), Overweight,

Proven winner, Prone to knee injuries.


Quarterback (2 years), Backup QB (2 years),

Anxious to prove himself.

Running Back (4 years), Sat out last

year with back injury, former Heisman

trophy winner.

Linebacker (1 year), Many off-field

problems, Great speed.

Columbus Cubs

Franchise History: You have always been a middle of the road kind of club. Not champions, but never doormats. At the end of last season, your All-Star

running back, Mac McGee, retired. He was a fan favorite and filled the stands

every week.

Needs: Obviously you need a running back. You also need help on the offensive line as your gave up more quarterback sacks than any other team

in the league last year. Your fans like proven veterans who understand what it takes to win. They do not tolerate law breaking athletes in this

conservative town.


AVAILABLE PLAYERS




years

Quarterback (8


of 3 Mega Bowl’s

Running Back (13


IFL, Twilight of his




catches for 732 yards last

year.


best pass blocker in

the game


league, Excellent run




Mega Bowl champ last


Place Kicker (17

years), Very


Defensive Tackle (6

years), Overweight,




Backup QB (2 years),


Running Back (4

years), Sat out last


trophy winner.


Many off-field


Boise Bulldogs

Franchise History: You are one of the original teams in the IFL. You have

won two league titles in the past 10 years. You are the most popular team in the west and have the most popular player, quarterback Mark McIntosh.

Needs: You really are will-stocked right now and hope to make a run at the

title next season. However, there is always room to improve if there is good, young talent available. John Young grew up in Boise and is a hometown

hero.


AVAILABLE PLAYERS



Has led the league in

tackles for the past four years

Quarterback (8

years), Last year’s

league MVP, Winner of 3 Mega Bowl’s

Running Back (13

years), May be the

best back ever in the IFL, Twilight of his




Fastest man in IFL, 55 catches for 732 yards last

year.

Offensive tackle (4

years), Thought to be best pass blocker in

the game

Center (15 years),

Strongest man in the league, Excellent run



Cornerback (3 years), Mega Bowl champ last


Place Kicker (17 years), Very


Defensive Tackle (6 years), Overweight,



Quarterback (2 years), Backup QB (2 years),


Running Back (4 years), Sat out last


trophy winner.

Linebacker (1 year), Many off-field


Ft. Lauderdale Friars

Franchise History: You are a brand new expansion team. Next season will be

your first in the league. With the number one pick in the draft your selected Heisman Trophy winning running back Will “The Thrill” Robinson.

Needs: What don’t you need? Any quality players would be a welcome

addition to the Friars. You have money to spend, use it wisely. The more proven veterans you can sign, the more fans will come to your games.


AVAILABLE PLAYERS




years


league MVP, Winner

of 3 Mega Bowl’s








Offensive tackle (4



Center (15 years),



Bowls




interceptions.

Place Kicker (17


pressure.

Defensive Tackle (6


to knee injuries.




Running Back (4





Chapter 6: Consumers, Savers and Investors

Chapter Overview

In their classroom activities and readings, the students will explore the following

types of concepts:

What are the two main sources of household income?

What factors influence wealth accumulation?

How do personal budgets help you make wise choices as a consumer and

saver?

What should you consider in making saving and investing decisions?

What are some alternative places to put your savings?

What are the advantages and disadvantages of using credit?

What protects consumer interest in a market economy?

Key Terms

Budget - summarizes an individual’s planned income and spending over a specific

time period.

Wage - earnings paid by the hour or unit of production.

Salary - earnings paid weekly, monthly or on a yearly basis.

Gross Income - total earnings before taxes and deductions.

Net Income - earnings after taxes and other deductions have been taken out.

Session Outline

Introduction

Greet the students.


Activities

Use the “Consumers, Savers and Investors” budget activity replacement on the

following pages.

Summary and Review


Notes:

Chapter 6: Consumers, Savers and Investors

Activity Replacement

Key Terms

Budget - summarizes an individual’s planned income and spending over a specific time

period.

Wage - earnings paid by the hour or unit of production.

Salary - earnings paid weekly, monthly or on a yearly basis.

Gross Income - total earnings before taxes and deductions.

Net Income- earnings after taxes and other deductions have been taken out.

Materials Needed:

● Copies of Budget Worksheets

● Copies of Vehicle and Housing Choices Worksheet

● Copies of Food, Entertainment, and Clothing Choices Work Sheet

● Calculators

All worksheets can also be found at online at www.jani.org click on Volunteer Resources and

the program.

INTRODUCTION:

Review with the students the importance of setting goals, getting a good education, and

choosing jobs that reflect their interests, skills, and values. Discuss why an occupation is

important. Emphasize that a job provides the income we need to pay for the things we

need or want (a place to live, a car, clothes, the latest movie, a new soccer ball, etc). Tell

the students that today they will learn about income and expenses - money we earn and

money we spend.

Discuss with the students how people get paid when they work for a company. Terms you

may wish to cover include wage, salary, gross income, and net income.

Explain to the students that when we earn money, it is important to plan how we will spend

this money by determining both income and spending goals. We do this by making a

budget. A budget serves as a plan for managing income and spending over a specific

period of time (usually one month). Tell the students that today they will learn to be better

money managers by making their own budget and buying things they want or need.

ACTIVITY:

Give each student a Budget Worksheet. You may complete each step of the budget

together as an entire class.

Spend a few minutes discussing the ‘Budget Worksheet’. Below are some things to highlight

with the students:

● Expense categories are listed on the left side of the worksheet (Savings, Housing

and Utilities, etc.). Explain that these are common things people have to pay for

every month. You should also explain that Housing and Utilities and Transportation

have several subcategories. For Housing and Utilities, students will choose their

apartment, cell phone package, etc. and add all these numbers together to get their

total Housing and Utilities expenses.

http://www.jani.org/

● Savings is listed first on the worksheet. Encourage students to always pay

themselves first when they get their paycheck, that is, to put 10% of their income

into their savings account each month. In this manner, they will have money for

life’s curve balls (car breaks down, child breaks arm, gas prices go up, etc.). They

will also have money to fulfill their goals and dreams (traveling to a foreign country,

getting married, going to a concert, etc.).

● The shaded column marked ‘Budget Guideline’ breaks down the students’ net

income by expense category. The amount that appears in each box is just a

suggestion - it indicates the maximum amount that should be spent in a particular

expense category.

● In the far right column, students will plan their own budget based on the Budget

Guidelines and their individual goals and priorities.

Give each student a Vehicle and Housing Choices Worksheet and a Food, Entertainment and

Clothing Choices Worksheet. Give the students time to make their selections and create

their budgets. Walk around the room and encourage students as they go through this

process.

SUMMARY: Review the completed budgets. Discuss with the students different household situations

that they may face, such as a medical emergency, car repair, loss of job, or home repair.

Discuss the importance of saving.

Ask the students what short-term and long-term goals they have. Determine how they will

alter their budget to achieve these goals.

Chapter 7: The Business of Free Enterprise

Chapter Overview

Enterprising individuals who put their creative talent to work in both large and small

companies drive innovation in the U.S. economy. In their classroom activities and readings the students will explore the following types of concepts:

Identify the characteristics of entrepreneurs.

Describe some of the paths successful entrepreneurs have followed.

Explain the role of small business in the U.S. economy.

Identify the kinds of information that can be helpful in starting a small

business.

Explain the advantages and disadvantages of sole proprietorships,

partnerships, and corporations.

Identify other types of business organizations, such as not-for-profits.

Describe how large corporations are organized.

Key Terms

Entrepreneurship – The imagination, innovative thinking, and management skills

needed to start and operate a business.

Sole proprietorship – A business owner by one person.

Partnership – A business organization owned by two or more people who share

ownership and control over the business.

Corporation – A business organization managed of behalf of its owners who provide

the funds.

Session Outline

Introduction

Greet the students.


Activities

Applying for a Business Loan – see pages 34 – 40 in the Guide for

Volunteers.

Summary and Review



Notes:

Chapter 8: Financing a Business

Chapter Overview

In their classroom activities and readings the students will explore the following

types of concepts:

How do financial markets help businesses obtain capital resources?

How do businesses borrow?

What is equity, and how is it used to finance business growth?

How do businesses save?

How can small businesses get a start?

What is the stock market, and why is it important?

What are balance sheet and income statements?

Key Terms

Cash Flow - The amount of money coming into and going out of the organization.

Session Outline

Introduction

Greet the students.


Activities

Use the “Paper Airplane/Cash Flow Exercise” activity replacement on the

following pages.

Summary and Review


Notes:

Chapter 8: Paper Airplane/Cash Flow Exercise

Activity Replacement OVERVIEW:

Students will simulate the manufacturing and marketing of paper airplanes to demonstrate cash flow and how it affects a business. KEY TERMS:

Cash Flow – the amount of money coming into and going out of the

organization. MATERIALS:

· Plenty of 8½” x 11” paper (can be paper for recycling)

· Calculator

INTRODUCTION:

Review material covered last week. Ask them if they can give an example of

opportunity cost decisions they encountered over the past week.

Tell the students that today they are going to focus on cash flow, and why it is of importance to a business. Cash flow is the amount of money coming

into and going out of an organization.

Define cash flow, and give a few examples to illustrate what it is from your experience.

ACTIVITY:

Tell the students that you are going to divide the class into groups of three to four and that each group will become a company that manufactures and

sells paper airplanes. Also, let them know that you are the banker. Ask one student to be your assistant. • Each company has $20,000 to invest at the beginning of the game. • Their goal is to produce and sell paper airplanes to you, the buyer.

• You will pay $25,000 for each airplane that meets your criteria. Have each group select a “material supplier” (who sells the paper), an “accountant” (who tracks income and expenditures), and a pilot (who flies

the planes).

The criteria for each company is as follows: - the planes must look like planes.

- the students may not rip the sheets and make multiple planes from one sheet of paper.

- they must be flown.

- each sheet of paper (raw material) costs $10,000. - important, you will not pay the companies until the end of class.

- the object of the game is to make as much profit as possible for your company.

Example of how the accountant is to track income and expenditures (have

them do this on the board).

Company

Quantity of

Sheets Purchased

Planes Sold

Net Profit

Plane Co. 2 @ $10,000

= $20,000

1 @ $25,000 $5,000

Allow each group to purchase any raw materials they desire for round one.

They may then manufacture their planes one at a time. Have the “pilot” for each group test fly their planes.

After each company has flown their planes, review the profit/loss for the

companies. Next, tell the students that since they won’t receive their revenue until the end of the class, they have a cash flow problem.

If they want to stay in operation, they must have more cash to buy more

raw materials (i.e., their current expenditures exceed their current revenue).

Allow them time to brainstorm ideas on how to acquire more cash: • If someone suggests that the materials supplier could extend credit,

inform them that it is against their policy.

• Try to focus their ideas so they answer “establish a line of credit with the bank.”

• Explain that businesses must anticipate cash flow problems long before they occur.

You are the banker and the students must come to you and present their

case for establishing credit. Grant them a line of credit for $40,000.

Inform them that the current rate of interest that borrowers must pay is X% (it varies depending on the company's risk factor). For example, if they

successfully flew both planes, grant them an interest rate of 8%. If they flew only one plane successfully, grant them an interest rate of 10%. If they

flew no planes successfully, grant them an interest rate of 12%.

If they choose to borrow against their line of credit, they must pay interest

on the money they borrow. In order to stay in business and solve their cash flow problem, it will cost them extra money.

Allow the groups to purchase additional raw materials, and fly their planes. Have the banker’s assistant track each company’s loan.

Example:

Company Loans

Plane Co. $40,000

Add an interest expense field to your board (To compute interest charge,

multiply the interest rate times the amount of the loan).

Company

Quantity of

Sheets Purchased

Interest Expense

(10% of loans)

Planes Sold Net Profit

Plane Co. 6 @ $10,000 =

$60,000

$4,000 3 @ $25,000 =

$75,000

$11,000

Example: Plane Company has a net profit of $11,000.

WORKPLACE APPLICATION: Share an example from your workplace as to how your company deals with

the cash flow problem.

• How does your company raise capital? • Talk about how different controls that your organization has in place to

ensure that it has proper cash flow (e.g. budgetary controls, billing procedures, etc.)

• What other expenses, other than materials , must an organization

have to be able to cover wages, marketing, capital expenditures, etc.)?

SUMMARY:

Cash flow is a problem that faces many businesses. An organization cannot

operate unless it has the cash on hand to meet basic expenditures. It must be anticipated and dealt with or the organization will fail.

SAMPLE PLANE FOLDING ON NEXT PAGE

creas

e

Making an airplane:

Fold From Here

To Here

Fold

Down

Fold in

Center

Grasp here

to fly

Chapter 9: Production and Productivity

Chapter Overview

Production of goods and services is important because it determines people’s

incomes and their consumption of goods and services. In their classroom activities and readings the students will explore the following types of concepts:

Define the meaning of productivity and describe its main determinants.

Identify ways in which business managers have improved productivity.

Explain why production costs change as output changes.

Define the law of diminishing marginal returns and how this law affects

production costs.

Identify the point at which managers decide what to produce. Explain the benefits of economies of scale.

Key Terms

Gross Domestic Product (GDP) – is the value of all final goods and services

produced in a country during a year. It consists of spending by consumers, by

businesses, and by government.

Labor productivity – the amount of goods and services workers can produce in a

given time frame.

Economies of scale – Reductions in cost resulting from large-scale production.

Session Outline

Introduction

Greet the students.


Activities

Production and Productivity at the Book Bindery – see pages 48 – 50 in

the Guide for Volunteers.

Summary and Review



Notes:

Chapter 11: Competition Among Businesses

Chapter Overview

In a free enterprise economy, businesses compete by coordinating their efforts with

one another to produce things that others value and are willing to pay for. In their

classroom activities and readings the students will explore the following types of

concepts:

Explain how a business is like a sports team in competing in a market.

Identify the four characteristics of a market structure.

Explain how firms in the four types of market structure make production and

pricing decisions.

Describe why businesses merge and the kinds of business mergers.

Explain how marketing helps businesses compete. Identify the four P’s of marketing and explain what they mean.

Key Terms

Perfect competition – A market structure in which a large number of firms all

produce the same product at the same time.

Monopolistic competition – A market structure with many firms that offer similar

but not identical products.

Oligopoly – A market structure in which a few large firms supply most or all

products in a market.

Pure monopoly – A market structure with only one seller in the market.

Session Outline

Introduction

Greet the students.


Activities

Oligopoly for Breakfast – see pages 58 – 61 in the Guide for Volunteers.

You may also choose to bring in a well-known brand-name cereal and its

generic equivalent. Pour out some of each into a cup and let students guess

which is the popular and which is the generic cereal. Ask them if there is a

difference in taste. Would they be willing to pay the difference in price if the

brand-name cereal tastes better? Also ask them to examine and comment on

the packaging of both cereals.

Summary and Review



Notes:

Chapter 13: Money and Financial Institutions

Chapter Overview

Money can be anything that is generally accepted in payment for goods and services.

Financial institutions such as commercial banks, savings and loan associations, and

savings banks are essential to the smooth operation of the U.S. economic system.

In their classroom activities and readings the students will explore the following

types of concepts:

Define money and describe its functions.

Describe the kind of money in use in the United States.

Explain the services banks and other financial institutions offer.

Describe how banks create money.

Explain what the Federal Reserve System is and what it does.

Explain why the value of money changes. Identify the nature of inflation and describe how people are affected by it.

Key Terms

Money Supply – The total amount of money in circulation within a country at some

period in time.

Inflation – A general rise in overall prices.

Session Outline

Introduction

Greet the students.


Activities

Inflation Characteristics – see pages 67 – 70 in the Guide for Volunteers.

Attached you will find a sheet of JA money that can be duplicated, cut and

used for the activity.

Summary and Review



Notes:

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