Aug 21 2012

## Introduction to Basic Economic Concepts – the Economics of Zoo Keeping

Introduction: This activity can be done individually or in small groups. It may be completed as a homework assignment or as an in-class activity. Divide the class into small groups (3 or 4 people). Each group is in charge of building a zoo.

Materials needed: Several A3 pieces of paper, scissors, tape or glue, and the images of animals available here.

Instructions for students: You and your teammates are the manager of a new business that has decided to open a zoo. Your zoo is a private, profit-seeking business that will charge admission to visitors. The purpose of the zoo , as with any business, is to earn a profit.

• You have to decide which animals to include in your zoo, but space is limited.
• You have 25 acres on which to build your zoo.
• Each type of animal requires a different amount of space, so you must choose which animals to put in your zoo. Remember, you need at least one male and one female of each animal so they can reproduce.

Below each animal is the number of acres just one of the animals requires. For example, one lion requires 2 acres of land. If you want four lions, therefore, you must use 8 of your 25 acres for lions.

Take a large piece of paper (at least A3) and using a marker, design the layout of your zoo. The paper represents the 25 acres you have for animals. Once you have decided which animals to include, how many of each animal, and calculated how many acres are to be used for each animal, cut out the animals you have chosen and paste each animal into its dedicated enclosure.

Once you have completed construction of your zoo, answer the discussion questions that follow.

Discussion Questions:

1. Did every animal make it into your zoo? Why or why not?
2. Did you include a turkey or a cow in your zoo? Why or why not?
3. Why didn’t you have a zoo with only monkeys?
4. Which type of elephant did you choose? Why did you choose the type you did and not the other?
5. What is the last animal to make the cut for your zoo?
6. What is the animal that just missed the cut for your zoo?
7. Did everyone in your group agree to include the the same animals?
8. Would everyone in your group have made the same choices if they did it alone?

Once you have answered the discussion questions, view this presentation, which provides answers to the above questions for discussion as a class.

Aug 14 2012

## My first Economics lesson – Scarce Chairs!!

The following lesson is a great way to start an IB or AP Economics class for the year. I just tried it this morning for the first time and it went great!

Instructions:

• Before your Econ students arrive for their first full class meeting, remove chairs until there are only half as many as you will have students. I stuck mine in the library, well out of view of the students coming to my class.
• Tell students that the custodian removed the chairs for repairs, or they were taken to another room for a presentation or something. Anyway, you don’t know when they’ll come back and it may be a couple of weeks.
• For now, we are stuck with this many chairs, and we have to figure out a way to resolve this problem!
• Tell the students it’s up to them to decide how our limited number of chairs will be allocated. Have them brainstorm solutions out loud while you write their suggestions on the board.
• Try to come up with 6-10 possible solutions, then have the students vote on the one they would like to see enacted. They can only vote once! Write the tallies next to each option on the board.
• If there is a tie for #1, have the whole class vote between the two or three options you’ve narrowed it down to until there is one clear winner.
The Economist’s Solution:
• Once the students have voted on their favorite solution, share with them the economist’s favorite solution. It is known as a sealed-bid auction.
• Give each student a slip of scrap paper and have him write two things: 1) His name, and 2) the maximum price he would be willing and able to pay each class period to have a chair to sit on.
• Collect the results, and in front of the students, organize their bids from highest to lowest. If there is a tie on the margin, have the students whose bids were identical bid again, writing their highest price on the back of the same slip of paper, then re-rank.
• The students with the highest bids will get a chair! For example, I had 17 students, and only 8 chairs. The highest bid was \$10, while three students were not willing to pay anything. Four kids were willing to pay \$1, but there were only two chair left at that point. When they re-bid, one was willing to pay \$2, one \$1.75, \$1.25 and \$1.20. Therefore, the two remaining chairs went to the students willing to pay \$2 and \$1.75.
• Finally, tell the winners that they can take a seat, and that everyone else must stand! At this point, of course, you can send the lowest bidders out to fetch the missing chairs and begin your debrief.
Economic concepts illustrated by the Scarce Chairs exercise:

Scarcity exists:

• When something is limited in supply and in demand, it is scarce.
• Everyone wants to sit, but the chairs were missing… chairs were scarce.
• Scarcity is a function of both demand and supply. The greater the demand relative to supply, the more scarce something is.

• Because scarcity exists, we must make choices about how to allocate our scarce resources
• We had to choose between competing systems for allocating the chairs

Rationing systems:

• When faced with scarcity, a system must be decided upon to ration the scarce items.
• The systems we decided upon ranged from a lottery to first come first serve to a merit-based system.

Something that is scarce has value:

• Everyone wanted a chair, yet they were limited. Because the chairs provide us with benefit, we value them, and are therefore willing to pay to have one.
• Value is a function of scarcity. The scarcer something is, the more valuable it becomes (gold), while less scarce items are less valuable (drinking water).

Consumer surplus:

• Consumer surplus is the difference between what you are willing to pay and what the price is.
• Sofia would have had lots of consumer surplus if she only had to pay \$2 , because she was willing to pay up to \$10.

Equity versus Efficiency:

• Equity means fairness, while efficiency requires that resources go towards their most socially optimal use, so that those who value something most end up getting that which they value.
• The tradeoff between equity and efficiency is a major theme of the IB Economics course.
• What is most efficient (an auction to determine who is willing to pay the most for the chairs) may not be equitable (or fair).
• When the richest students end up in the chairs, those with lesser ability to pay feel that they’ve been treated unfairly.
• A lottery in which names would be drawn from a hat to determine who gets a chair is certainly more equitable, but is actually less efficient, since those who get the chairs may not be those who place the greatest value on having a chair.
• Auctioning the chairs assures that those who value them the most will end up getting them, therefore resources are allocated most efficiently.

Aug 09 2012

## Preparing for a new year of AP and IB Economics

Another summer has come to an end and I’m in my classroom preparing for another year of Advanced Placement and International Baccalaureate Economics. There’s a lot to be excited about this year, including the fact that the co-author of my textbook, Pearson Baccalaureate’s Economics for the IB Diploma, Sean Maley, has joined me at Zurich International School as a teaching partner. He will be taking two sections of IB Year 1, two of IB Year 2 and one AP Microeconomics this year. I will have the same IB load and one AP  Micro/Macro combined course.

I’m also excited because this year I will be using my brand new PowerPoints and Lecture Notes created over the summer, which are a huge improvement on their popular predecessors.

In addition to adding to the already large library of video lectures on The Economics Classroom created last year, I plan to produce even more 8-15 minute YouTube lessons covering the remaining topics from AP and IB Economics. For each new lesson I produce, I plan to create a practice activity to go with it (all of last year’s activities are already available for free here). I’ve received several requests from teachers and students for answer keys to go with each activity, which is also something I plan to create this year. By this time next year, I hope to have a workbook for AP and IB Economics available for purchase through my website.

Other exciting developments in Welker’s Wikinomics include:

• Flashcards on key terms from every section of the AP and IB course, developed late last school year to help my students study for their exams,
• A comprehensive glossary of over 330 Economics terms, also made for exam review last year,
• Floating definitions on the Economics Classroom, so that no matter what post you’re looking at, the definition of any key term can be read without having to leave the page,
• My free mobile app for the Android and iPhone, which provides convenient access to the mobile versions of both Economics in Plain English and The Economics Classroom, along with full access to the flashcards and glossary on your mobile device.

As always, I love hearing from students and teachers using my resources. Please feel free to post your comments to this blog or send me emails directly at welkerswikinomics@gmail.com. I love hearing suggestions and talking to teachers and students about Economics about any topic whatsoever!

Here’s to a new school year and another exciting year of Economic teaching and studies!

Aug 03 2012

## Macroeconomics and International Economics PowerPoints and Study Guides NOW AVAILABLE!

Welker’s Wikinomics Lecture Notes – PowerPoint and PDF Study Guides: ORDER HERE!

Two weeks ago I finished a complete overhaul of my popular Microeconomics PowerPoints and Study Guides. Now the Macroeconomic and International Economics PowerPoints and Study Guides are ready to order.

Here’s what you get when you order the Macro and International Lecture Notes:

The Macroeconomics and International Economics Lecture Notes include the following units of study:

•     1.0 Introduction to Economics (45 pages with 2 video lessons)
•     2.1 GDP and its Determinants (23 pages with 3 video lesson)
•     2.2 Aggregate Demand and Aggregate Supply (38 pages with 2 video lesson)
•     2.3 Macroeconomic Objectives (40 pages with 3 video lessons)
•     2.4 Fiscal Policy (28 pages with 5 video lessons)
•     2.5 and 2.6 Monetary and Supply-side Policies (36 pages with 3 video lessons)
•     3.1 Free Trade and Protectionism (27 pages with 3 video lessons)
•     3.2 Exchange Rates (26 pages with 3 video lessons)
•     3.3 Balance of Payments (24 pages with 4 video lessons)
•     What you get: A 287 page set of lecture notes including 28 video lessons

Here’s a quick look at one of the units:

• ## Order Welker’s books

for IB Economics

for AP Macro

• ## Meet the Authors

Jason Welker @ ZIS

Andrew McCarthy @ UWC