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Economics Unit 8 Grade 10 Term 2 Week 3 - 2020

The document provides lesson notes on price formation for Economics Grade 10. It includes definitions of key concepts related to demand, supply and price formation. Examples are given to illustrate market equilibrium, market disequilibrium in the form of market shortage and market surplus. Additional resources and consolidation activities with questions are included.

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cyonela5
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207 views

Economics Unit 8 Grade 10 Term 2 Week 3 - 2020

The document provides lesson notes on price formation for Economics Grade 10. It includes definitions of key concepts related to demand, supply and price formation. Examples are given to illustrate market equilibrium, market disequilibrium in the form of market shortage and market surplus. Additional resources and consolidation activities with questions are included.

Uploaded by

cyonela5
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Directorate: Curriculum FET

SUBJECT and ECONOMICS GRADE 10


GRADE:
TERM 2: Week 3
TOPIC: Dynamics of Markets
LESSON 8 Lesson unit 8 Price Formation
AIMS OF LESSON: Learners must be able to successfully answer any relevant questions on demand, supply and price formation.
INTRODUCTION: Dynamics of Markets is linked to content covered in:
Gr.9 EMS – Price Theory
KEY CONCEPTS: Price Formation, Market equilibrium, Market equilibrium price, Market disequilibrium, Market surplus, Market shortage
SKILLS: At the end of the lesson the learners should be able to:
1. Briefly describe the relevant concepts
2. draw a demand and supply curve from relevant data on the same axis
3. Answer data response questions on price formation

NOTES: Lesson 8: Price Formation

Read Price Formation: The process whereby the price of a product is determined by the interaction between the demand and
carefully supply of that product.
through Market Equilibrium Point: The point where the demand curve and the supply curve intersects. It is normally ndicated by the
the notes.
letter e, but any other letter can be used.
Rewrite it in your
Market Equilibrium (Quantity): It is a market state where the quantity demanded in the market IS EQUAL to the quantity
workbooks.
supplied in the market. The quantity at the point of equilibrium.
Make flashcards by
Market Equilibrium Price: The price where the quantity demanded equals the quantity supplied. The price at the point of
writing the
equilibrium.
concepts on the
Market Disequilibrium: Where the quantity demanded does NOT EQUAL the quantity supplied.
one side and the
Market Surplus: It occurs where quantity supplied is MORE than quantity demand.
explanations on the
Market Shortage: It occurs when quantity supplied is LESS than quantity demand.
other side. Go
through it daily.

1|Page
Directorate: Curriculum FET

A Graph
has a Example: PRICE FORMATION - Demand and Supply Schedule
vertical
axis and a Price in Rand per Quantity demanded Quantity supplied
horizontal axis. packet of biscuit (Packets of biscuits) (Packets of biscuits)
Quantity Demand R2.00 500 100
and Supply is
illustrated on the R4.00 400 200 Market Equilibrium = 300
Horizontal axis
AND Price in Rand Market Equilibrium Price = R6
R6.00 300 300
is illustrated on the
Vertical axis R8.00 200 400
Each price/
quantity R10.00 100 500
combination is
illustrated by a
DOT on the two Demand and Supply Curves: Biscuits
curves.
12
The point where D S
Price
quantity demand 10
in
and quantity supply
Rand 8 Market Equilibrium Point = e
INTERSECTS is
called the market 6 e Market Equilibrium = 300
equilibrium ( 300
packets of biscuits) 4 Market Equilibrium Price = R6
Equilibrium Price = 2
R6 S
0 D
0 100 200 300 400 500 600
Quantity

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Directorate: Curriculum FET

EXAMPLE: MARKET DISEQUILIBRIUM = MARKET SHORTAGE AND MARKET SURPLUS


Price in Rand per Quantity demanded Quantity supplied
packet of biscuit (Packets of biscuits) (Packets of biscuits)
R2.00 500 100 Market Shortage

R4.00 400 200 Supply is less than Demand

R6.00 300 300

R8.00 200 400


Market Surplus
R10.00 100 500
S is more than demand
Supply

Demand and Supply Curves: Biscuits


12
Price D S Supply = 500
10
in Demand = 100
Rand 8 Market Shortage
6 e
4

2
S D Supply = 100
0
0 100 200 300 400 500 600 Demand = 500
Quantity Market Surplus

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Directorate: Curriculum FET

ADDITIONAL https://youtu.be/2Wp-diDRVKI Econ Gr.10 Core Notes


RESOURCES: https://youtu.be/ShzPtU710xS Econ Gr. 10 Answer Series
Any other Caps Approved Econ Gr.10 Textbook
CONSOLIDATION 1. Study the table below and answer the questions that follows:
ACTIVITIES:
Price in Rand Demand Supply
Answer the (pair of sneakers) (sneakers) (sneakers)
following
250 500 100
questions.
500 400 200
750 300 300
800 100 500
1000 50 600
1.1 Draw the demand and supply curve on the
Price
in
Sneakers same axis and indicate clearly the
equilibrium point, equilibrium price and the
Rand 1200 equilibrium quantity. (8)
1.2 Name the equilibrium price. (1)
1000 1.3 How many pairs of sneakers will be produced
at a price of R500? (1)
800
1.4 Briefly describe the law of demand. (2)
600 1.5 Briefly describe a market shortage. (2)
1.6 Name the situation that will arises if the
400 market supply exceeds the market demand?
(1)
200
1.7 How can income of a consumer influence
0 the demand for sneakers. (4)
0 100 200 300 400 500 600 700
Quantity
4|Page

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