"Supply and Demand"

AUTHOR: Lisa Knight, Meadow Glade Elementary, Battle Ground, WA

GRADE LEVEL: Appropriate for grades 4-7 (easily adaptable for 3rd grade)

OVERVIEW: This lesson allows for personal involvement in the concept of supply and demand which helps the students see how it relates to their everyday life.

OBJECTIVE(s): Students will be able to:

  1. Define the terms supply and demand.
  2. Identify what happens when demand exceeds supply.
  3. Identify what happens when supply exceeds demand.
  4. Explain how supply and demand affects choices such as: careers, types of cars made, etc.
  5. Give recent examples of instances where demand exceeded supply and the results.
  6. Explain how economic stability or affluence affect
    supply and demand.


Teacher materials: tokens, prize for each student in class (it can be something as simple as chocolate kisses)

Student materials: pencil, 3 index cards


Students will be given a box of tokens with at least two different colors in it and asked to select any number of them from 1 to a handful.

Place a value on the tokens. (Make certain this is done AFTER students have already selected their tokens.)

Pull out an object students would desire to won and let the students know that they will only receive an "A" on this lesson if they own this selected item of which you happen to have EXACTLY one of. You will announce the bidding to be open at "10" and they may use their tokens to purchase the item.

Continue auction until a student has paid a high price for this item and received it. Then pull out a large supply of the very same item just sold while announcing that you do just happen to have a few more of these items and you're willing to open the bidding at "1". WAIT & WATCH REACTION!

Write supply and demand on board. Ask the individual who bought the overpriced item to define what these terms mean to him in light of the experience he just had, explain why he was motivated to pay such a high price for it, and let us know if he would have paid so much had he known there were enough items to go around.

Guide students in a discussion which covers all objectives. (I found an effective lead-in to objective #6 is to ask the following: "What if these tokens represented money and this was all the money you had available for two months?")


Ask students to think of three items in their desks and to secretly set a price for each one of them on an index card which is folded so that it can stand upright on the desks.

Instruct students to then take out the items and place them by the appropriate "price tag" on their desks.

Invite students to go "shopping" and check out all the prices in the "store".

Lead the students in the discussion which will naturally follow with questions such as:

"Now that you know how other merchants priced their items how will it affect your pricing of the same items?"

"Were there some items that would be in high demand because of their low supply? How might that affect pricing?"

Students may want to stock their "shelves" differently after doing some comparison shopping and seeing the availability of certain items. You may then choose to give them another opportunity to price three items of their choice and discuss their changes and why they were made.


Thanks, Lisa, for such a great lesson plan.

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