# CTE Resource Center - Verso - Economics and Personal Finance Instructional Scenarios

CTE Resource Center - Verso

Virginia’s CTE Resource Center

Instructional Scenarios

I Have One Ticket to the Super Bowl

Duty/Concept Area

Developing Basic Economics Concepts and Structures

Scenario

Marilyn has an extra ticket to the Super Bowl. All her friends want to go with her. They have made lots of suggestions for how to decide what she should do with her extra ticket.

Taylor: Have a lottery. Each of us would put our names in a hat and you could pick one.
Bailey:
I asked first; I should get it.
Grace:
My favorite team is playing, so I should get the ticket.
Will:
Why don’t you give it to the one who pays you the most money for it?

Marilyn’s friends have all suggested different ways of allocating a scarce resource—the Super Bowl ticket. She likes Will’s idea best because of the income potential. But none of friends earns more than minimum wage, so they may not be willing to pay her much. How could she discover who is willing to give up the most money to have the ticket?

In a market economy, answering this question involves understanding the forces of supply and demand. Those forces determine the price. Say Marilyn decides to take Will’s advice--but to expand her market by auctioning her ticket on eBay. If only one person was willing and able to purchase it (low demand), he or she could buy it for $1. If many people were willing and able to purchase it (high demand), the auction price could skyrocket. So, price is a means for allocating limited (scarce) resources. In this case, the limited resource is a Super Bowl ticket.

As Marilyn decides what to do with her Super Bowl ticket, she has become a part of the “price system.” The strip of paper she holds in her hand was developed, produced, and distributed by marketers, printers, and sellers; it was publicized by advertisers and promoters; it was limited in number and priced by marketers, based in part on the size of the venue, costs of the event, and anticipated demand by consumers (e.g., ticket vendors and fans). If she decides to sell her ticket, she must determine the demand for it and then select the most likely means to reach the consumer who will pay the highest price and provide her with the biggest profit.

Big Question

Why is a market economy sometimes viewed as a “price system”?

Focused Questions

  1. What are some methods for allocating scarce natural resources? Scarce human resources?
  2. How do prices allocate scarce resources, goods, and services in a market economy?
  3. How do prices provide a signal to producers about what goods and services to produce and what resources to use in that production?
  4. How do prices provide important information to consumers? What information does the price of a Super Bowl ticket provide to consumers?
  5. What does the law of demand tell us about how people will respond to price increases and decreases for products?
  6. What does the law of supply tell us about how soft drink vendors at the Super Bowl will respond when the equilibrium price (price they can get for a soft drink) increases? When the equilibrium price decreases?
  7. If demand for soft drinks increases, which way will the demand curve shift, and what will happen to the equilibrium price and equilibrium quantity? What if demand decreases? If supply increases? If supply decreases?
  8. In a market economy, what determines the price of shoes? Of houses? Of wages? Of Super Bowl tickets?
  9. If prices in a market economy are determined by supply and demand, why would government ever get involved?

Project-Based Assessments

Market Survey Results: Supply, Demand, and Equilibrium

Determinant of Demand Event/Condition/Headline Demand
(Up or down?)
Demand Curve shifts
left (L) or right (R)?
Equilibrium Price
Demand
(Up or down?)
Equilibrium Quantity
Demand
(Up or down?)
           
           
           
           

Resources

Related Virginia Standards of Learning

If You’re So Smart, Why Aren’t You Rich?

Duty/Concept Area

Developing Basic Economic Concepts and Structures

Scenario

People can earn income by selling their resources. Latonya might own some natural resources—like timber—which she harvests and sells from time to time. Derrick might invest in capital equipment like party inflatables (e.g., bouncers, slides) to rent out as a source of income. Jennifer might use entrepreneurial skills and start a business selling cookies and cupcakes. Kirsten might get a job at Burger Place.

Like Kirsten, most people earn the majority of their income by working (selling their labor). Yet, a number of factors determine the amount people earn for their labor. Some very hard-working people earn low or moderate salaries, while some rock stars, professional athletes, and authors of popular books earn huge incomes. Within the same profession, some workers earn a lot while others earn little (e.g., retail or health care).

Kirsten is happy for now working at Burger Place, and she loves being a part of the restaurant industry. But she would like to prepare herself to earn more money once she finishes school. She wonders what her options are for earning a decent wage that will continue to build over time.

Big Question

Why do some people earn high incomes while others earn little?

Focused Questions

  1. What determines market value? What determines the market value of a Babe Ruth rookie year baseball card? What connections can you draw between the market value of a baseball card and the market value of a baseball player’s salary?
  2. What determines the market value of a plumber? An accountant? A daycare worker? A day laborer? A movie star? 
  3. How does the market determine the market value of various skills? What happens when there is a shortage of physical therapists at the current wage? What happens when there is a surplus of roofers at the current wage?
  4. What happens to wages when the quantity supplied of a particular type of worker is greater than the quantity demanded (e.g., workers at fast food restaurants)?
  5. What happens to wages when the demand for a particular type of worker is greater than the supply (e.g., a physician who can perform 45 successful heart transplants in a year)?
  6. Where can you find information about the market value of many careers?
  7. Why might people in the same job category, but with differing skill levels, earn different salaries (e.g., waitstaff and chefs; bricklayers and construction contractors)? How might higher productivity affect a worker’s income?
  8. What is human capital? What would be considered an investment in human capital?
  9. What incentive do employers have to spend large sums of money to educate and train their employees? How might training improve productivity? How might increases in productivity lower cost of production and/or make it possible to increase wages? Would employer-funded education be an advisable path for Kirsten to pursue? How might she learn more about this type of educational opportunity?
  10. Why are the following statements true for a company seeking to maximize profits:
    • When an additional worker adds more to revenues than to cost, the company will want to hire the worker.
    •  When an additional worker adds more to cost than to revenues, the company will not want to hire.
  11. Many students invest time and money earning a college degree or other certification. How would one weigh the costs and benefits of making this investment in human capital? How might further education affect Kirsten’s chances to make more money in the restaurant industry?
  12. If demand for more green technology increases or decreases, people in many careers will be affected. Name some of the types of workers for which demand may be affected. Could increased demand for green technology affect Kirsten’s future in the restaurant industry? Explain.
  13. What other factors should Kirsten examine as she decides how to increase her earning capacity in the restaurant field or a related industry?

Project-Based Assessments

Resources

Related Standards of Learning

Why Would I Care How the Economy Is Doing?

Duty/Concept Area

Developing Basic Economic Concepts and Structures

Scenario

Sam, your older brother, will graduate from college this spring with a major in Spanish and hopes to find a good job right away. But he is confused by the all the comments from members of your family.

Aunt Sally: Thank goodness you didn’t graduate in 2009. The economy was in a deep recession.
Uncle Raymond:
Be sure you look for a job where your wages will keep up with inflation.
Granddad:
You might have a hard time finding a job because economic growth is low and unemployment rates are high. Remember that you will be competing with unemployed people who already have experience.”
Grandmom:
“I hope you get a job close to home.”
You:
“Thank goodness I’ve studied economics, big brother, so I can explain all that stuff to you!”

Big Question

How does the condition of the economy affect a person just entering the job market?

Focused Questions

  1. What are a nation’s main three economic goals? What economic indicators are generally used to measure success in those goals?
  2. What are rates you might expect for these economic indicators in a healthy economy? What were these rates 20 years ago? What were these rates 10 years ago? What are these rates in the current economy?
  3. How might Sam’s prospects for finding a job be affected by the unemployment rate? By the GDP? By the CPI?
  4. How is the business cycle a “picture” of the economy over a period of time?
  5. What are the four stages of the business cycle? What do you expect to be happening with prices, unemployment, and economic growth in each stage?
  6. Which stage(s) would be best for seeking a job? Why? Which stage is the worst for jobseekers? Why?
  7. In which stage of the business cycle is the current economy? How might this affect Sam’s job prospects?
  8. What are some of the causes of inflation? Explain your answer.
  9. Who is helped and who is hurt by inflation, and why? If Sam were to graduate during a time of inflation, how would his job prospects be affected?
  10. What are some causes of recession? Explain your answer.
  11. Who is helped and who is hurt by recession, and why? If Sam were to graduate during a recession, how would his job prospects be affected?
  12. How can monetary and fiscal policy be used to stimulate the economy or slow it down? How would those actions affect economic growth, inflation, and unemployment?
  13. How could government intervention in the economy affect Sam’s job prospects in the short-term? In the long-term?
  14. Why should Sam look at the “big picture” of the economy when making a career decision?
  15. Based on the current economy, what are some suggestions you could offer Sam that might improve his chances of making a wise career decision after graduation?

Project-Based Assessments

Resources

Related Standards of Learning


Insuring Your Future

Duty/Concept Area
Demonstrating Knowledge of the Role of Insurance in Risk Management

Scenario
Congratulations. You have been hired for your first full-time job, which will enable you to become financially independent. It’s time to consider insurance options that can help you reduce personal financial risk as well as contribute to your long-term financial security. Your employer offers several health and dental insurance plans, as well as short-term and long-term disability insurance, and life insurance coverage. The employer covers a portion of the health insurance costs and provides a basic life insurance policy—as long as you’re employed at the company. However, the disability insurance and more extensive life insurance coverage comes with an additional cost to you. You realize that insurance can be a valuable asset and a security net, but you’re really not sure how to get started with the decision process.

Big Question
How do you evaluate the benefits and costs of insurance options?

Focused Questions
  1. What is the difference between short-term and long-term disability insurance?
  2. What are the pros and cons of choosing a medical insurance plan with a high deductible?
  3. What are the differences among term, whole, and universal life insurance?
  4. How can an annuity life insurance program be used in retirement planning?
  5. If you leave your employer, can a life insurance policy be converted to an individual policy? Explain.
  6. What are the advantages of acquiring insurance at an early age?
  7. What is the role of a personal financial planner vs. an insurance agent?
Project-Based Assessment
Resources
Related Standards of Learning


Turning an Inheritance into an
Investment

Duty/Concept Area
Demonstrating Knowledge of Taxes

Scenario
Your favorite aunt, age 89, passed away six weeks ago. Her husband predeceased her, and they had no children. Because you were always close to your aunt and spent time with her up until her death, you’re not too surprised when a letter arrives from your aunt’s attorney informing you that you are named in her will. Knowing that your aunt had relatively modest means, you are amazed to learn that a check for $50,000 will be sent to you within a few weeks. You’ve never received a cash inheritance, and although it’s tempting to think about a big vacation or a new car, you begin to think about how best to put the money to work for your future financial security.

Big Question
What are the financial implications of an inheritance?

Focused Questions
  1. At what dollar level do inheritance taxes become applicable?
  2. How do federal and state laws apply to inheritances?
  3. If you wish to earn a maximum return and do not plan to use the money until you retire, what are some wise investment options?
  4. If you wish to invest the money short-term, and then use a portion of it for a down payment on a house, for example, what are some wise investment options?
  5. When investing your inheritance, why should you consider future tax implications?
  6. Why is it important to have a will and keep it up to date?
  7. How can you set up a will and manage your financial affairs to avoid the probate process for your heirs?
Project-Based Assessment
Resources
Related Standards of Learning


Saving for a Sunny Retirement

Duty/Concept Area
Demonstrating Knowledge of Investment and Savings Planning

Scenario
Albert Einstein once said that the Rule of 72 governing compound interest is the greatest mathematical discovery of all time. His point was that when modest savings start at an early age, interest compounds over time, resulting in an amazingly large sum of money at retirement age.

Once you start working and earning money on a regular basis, you will want to pay closer attention to Einstein’s observation. He was a genius, after all.

Let’s say your first job provides you with a take-home pay of $1,200 per month, and you’ve decided to investigate the best ways to save and invest a portion of your salary. How will you get started paying yourself?

Big Question
What are the financial benefits of starting an investment and savings plan as soon as
you become employed?

Focused Questions
  1. What is the Rule of 72?
  2. What percentage of your $1,200 monthly income should you devote to savings and investments? As you age, how should that contribution change?
  3. What are tax-deferred savings accounts, and how can you take advantage of these options?
  4. How can an investor purchase stock in a public company?
  5. What is e-trading, and how much expertise does stock trading require?
  6. What are company stock options?
  7. What is a mutual fund?
Project-Based Assessment
Resources
Related Standards of Learning