This lesson focuses on suppliers and demanders, the participants in markets; how their behavior changes in response to incentives; and how their interaction generates the prices that allocate resources in the economy. Learning about the reaction of demanders and suppliers to price, and the impact of non-price conditions (the determinants of demand and supply) creates a foundation for understanding the dynamism of markets. Examining the interaction of consumers and producers as they respond to market conditions also generates an appreciation for the role of prices in transmitting information that coordinates the economic response to scarcity. The dynamics of the market, a vital part of students’ understanding of economics, may be explained with tables and narrative, or with graphs, or both – whatever is best suited to individual learning styles.
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