Instructions:

1. Work with your partner to complete each section. Read the prompts carefully and
discuss the answers together.
2. Write your responses in the space provided. Be prepared to share your thoughts with the
class afterward.

Part 1: Microeconomics vs. Macroeconomics

Activity: Classifying Scenarios

Below are several real-life scenarios. Work with your partner to decide whether each scenario
involves microeconomics or macroeconomics. Explain your reasoning.

https://www.youtube.com/watch?v=wvwgIiP4gjY

A new tax on s
food restaurant

The unemploym
recession.

Apple introduc
stores.

The governmen
 within the
economy are
affected by
lowered interest
rates

It is about a single
A pizza shop in your neighborhood lowers its prices to attract more Micro firm within the
customers. economy

Part 2: The Role of Markets in Allocating Resources

Activity: Exploring the Market System

1. Look at the image of a street market below.

2. Discussion Questions (Talk with your partner and write down your thoughts):
 a. Why do you think there are many buyers and sellers at this market?
There might be the city center, where lots of people come regularly. This
encourages more stalls to set up and therefore more buyers to buy the products (as
there are more shops and options available).

b. What would happen if one seller charged double the price of everyone else?
Doubling the price will lower the demand for that seller’s product, as buyers still
have other, cheaper options available.

c. What would happen if more buyers started coming to the market? What if fewer
sellers showed up?
If more buyers came to the market and fewer sellers showed up, there will be a
shortage in supply and lower prices for the products.

d. Would you be interested in selling products at this market? Why or why not?
Yes, because there are lots of customers present at this market and it will be easier
to attract them from rival markets, despite there being high competition.

Part 3: Shortages, Surpluses, and Prices

Look at the two images below:

 Image 1: People queuing outside an empty store (a shortage).

 Image 2: Piles of unsold vegetables at a market (a surplus).

 o

Discussion Questions (With your partner, discuss and write down your answers):

 What happens to prices when there is a shortage of a product? As shown in Image 1,

when there is a shortage of a product, the prices for that product rise.
 What happens to prices when there is a surplus of a product? As shown in Image 2, when
there is a surplus of a product, the prices for that product fall.

Part 4: Key Resource Allocation Decisions

Imagine you’ve been given a piece of land to manage. Based on the special characteristics of
your land, you and your partner must decide:

1. What to produce? Fresh fruits and vegetables

2. How to produce it? Supplier of fresh fruits and vegetables who grows on a farm
3. For whom to produce it? Public – general people

Choose from these:

 City center
 Farmland
 Lakeside property

Discussion Questions:

 How will your land’s unique features influence what you produce?
The land’s unique features doesn’t influence what we produce as we have a supplier who
makes the product by growing it on a farm. We chose to sell in the city center as not
many people will be supplying this product.
 How will you decide how to produce the goods?
 We have a partnership with a farmer.
 Who will you sell your products to, or for whom are you producing?
We will be selling our products to the general public.

Write down your answers and be ready to explain how your land type influenced your choices.

Part 5: The Price Mechanism and Resource Allocation

https://www.youtube.com/watch?v=ck20QD6VbGc

Using the concepts you’ve discussed above and learned in the video, think about how the price
mechanism answers the three key resource allocation questions:

 What to produce?
Price makes us decide which products to sell as there is a limited budget, and so we
can only sell so much.
 How to produce?
The price mechanism decides how much we can sell, a price at which customers are
content to pay. This can thus increase or decrease our production and profitability,
therefore according to the amount of revenue we receive, we can decide on whether
to use labour or capital for the production of our goods.
 For whom to produce?
 The price mechanism decides the people we can sell the product to, as those who can
afford the product are the ones for whom we produce.

Work with your partner to explain how the price mechanism (the way prices adjust due to supply
and demand) helps answer these questions. Use examples from the market system or scenarios
you’ve discussed.

Extension Activity (Optional):

If you finish early, think about how the market system could be affected by global events.
Discuss with your partner:

 How would a global pandemic change the way markets work?

A global pandemic can change the way markets work by enabling them to buy and sell
products online.
 What would happen to supply and demand if a new, revolutionary technology is
introduced?
The supply for older technology will be higher, while the demand for the older, primitive
technology will lower. For the revolutionary technology introduced, the demand will
increase.

Reflection:

At the end of the worksheet, write a brief paragraph summarizing:

 One key difference between microeconomics and macroeconomics that you and your
partner discovered.
 One way the market system works to allocate resources effectively.

The difference between microeconomics and macroeconomics is that microeconomics deals with
the study of individual components within an economy, for example, an individual person, a
household or a firm. On the other hand, macroeconomics deals with the study of the economy as
a whole or a collective entity of different individuals, households and firms combined. Using the
price mechanism which decides the equilibrium price of a product at which consumers are
willing and able to pay while the suppliers are willing and able to sell a good or service, the
market is able to determine what goods to produce, how to produce and for whom to produce
them. This effective allocation solves the economic problem to some extent, using the price
mechanism.