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 Help broaden your students’ understanding of the underlying economic principals behind current events, as well as other more basic economic concepts.
FOR THE WEEK OF Oct. 4, 2009
Elementary
Article Link: "Toymakers, stores helping Santa stay on a budget ," Oct. 2, 2009, The Denver Post, 7B
Economic terms:
- budget: a household method for planning how to spend, save or invest family income.
- Retailers: a store that sells goods from a fixed location or by mail in small or individual lots for direct consumption by individuals.
- Job security: is the probability that an individual will keep his or her job; a job with a high level of job security is one where a person would have a small chance of becoming unemployed.
- Holiday quarter: The last 3 months of the year: October, November and December.
- Sales: the transfer of a good or service in exchange for money.
Economic Concepts:
- incentive: an additional factor that allows or motivates a particular choice—in this case the purchase of toys. Toy manufacturers and stores will offer discounts—which are incentives.
- Gift economy: holidays are traditional gift-giving times. Family members give each other gifts without any explicit agreement for immediate or future rewards. This is referred to as a “social norm.” This behavior is outside the market system because there is no expected exchange—especially from children).
Discussion: The toy industry is expecting weak holiday sales. As a result the industry is going to offer discounts and lower-priced toys to bring parents into the stores. The holidays generate 40% of sales for most retail stores. A big decline in holiday sales would be disastrous for these retailers.
Questions for discussion: How much do you think your family spent on toys last year? Do you think your family will spend more, the same or less this year? Why? How much money does the U.S. spend every year on toys? (Ans.: $9.82 billion) Do you agree or disagree with the statement from the article: “Parents will scrimp elsewhere, not on kids.”?
Secondary
Article Link: "Grave economies ," Oct. 4, 2009, The Denver Post, 1A
Economic terms:
- job: work that is done for pay. A job is a contract between an employee and an employer. The employee must perform the tasks of the job under the direction of the employer. The employer has the right to hire or fire the employee.
- Second market: an aftermarket between an owner of a good or service and a purchaser. This is a market for any property or asset that has been previously sold. The property may be new or used.
- Affordable: not a luxury. It also refers to a lower price for a good or service.
- Recession-proof: an industry or business that is not affected by an economic decline. Usually economists mention food as an example of a recession-proof business. See below for a discussion of “wants” vs. “needs.”
- Revenue: income that a company receives from its normal business activities, usually from the sale of goods and services to customers.
- Recession: usually defined as 2 consecutive quarters (6 months) of declining national production. The current recession started in December 2007 and is not expected to end until the end of 2009.
- buyer’s market: when one or more underlying factors shift the supply or demand curves so that prices drop.
Economic Concepts:
- wants vs. needs: Economics does not differentiate between wants and needs because one person’s need may be someone else’s want—and vice versa. However, economists recognize that some items are critical to survival: food, water, shelter. In a modern society we can add fuel and other forms of energy. Industries that are involved in producing or distributing these goods are considered “recession-proof.”
- Long term vs. short term: economics teaches us to make choices with both the long term and the short term in mind. A choice made with only one or the other in mind may not be the best choice. Many people make choices for the short term and find out later that there are negative long term consequences.
Discussion: The woman featured in the article is unemployed and is selling all of her non-essential assets—jewelry, coins, and her cemetery plot. The article describes how the current recession is affecting the funeral business. Families are spending less on burials or choosing cremation. Families must, by law, dispose of the body of a deceased person. Funeral companies are reporting declining revenues and having to lay off workers. Funeral directors sometimes help very poor families with discounts. Cremations are much less expensive than burials. As a result there has developed a supply of open burial plots in cemeteries. The owners of these plots are trying to sell them to raise cash and will, instead, be cremated. The sale of pre-paid funerals has also declined.
Questions for discussion: Do you think the funeral business is recession-proof? Why or why not? Discuss the statement: “Often we forfeit tomorrow’s memories for today’s economies.”?
Handy Dandy Guide
6 core economic Principals
Colorado Model Content Standards for Economics
 Everyday
Economics is written by Dennis Grogran, Program
Director, Colorado Council for Economic Education. For information about
CCEE's other programs, call 303-752-2323 or e-mail dgrogan@ccee.net.
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