Project 1 - Photo Hounds

1. Project 1 - Photo Hounds Driving Questions: What could celebrities do to keep the paparazzi at bay?

2. Project 1 – Photo Hounds • Students will explore the world of celebrities and the paparazzi in order to develop an understanding of key economic concepts including supply and demand, the functions of prices, incentives, and the role of culture in the production, distribution, and consumption of goods and services. • In teams, students will record infomercial videos that creatively address these key concepts as well as explain what they theorize celebrities could do to solve the problem of the pesky paparazzi.

3. Project 1 – Photo Hounds • Group Contract • Each team will develop a group contract. • Sample provided • 25 points • Include: • How group will operate • How to handle conflict • Consequences for team members that don’t participate

4. Project 1 – Photo Hounds • What could celebrities do to keep the paparazzi at bay? • How do the paparazzi work? • Why do the paparazzi hound celebrities? • Do celebrities need the paparazzi? • What incentives are at work here for celebrities? For paparazzi? • How does the U.S. culture impact paparazzi’s actions? • Why do the prices paid for celebrity photos fluctuate? • How do the principles of supply and demand apply to the paparazzi situation? • What could celebrities do to change the situation if they wanted to? • Why would your solution work?

5. Project 1 – Photo Hounds • Team 1: • Team 2: • Team 3:

6. Project 1 – Photo Hounds • Infomercial Video: • 200 points (with persuasive letter) • Each team conducts research and develops a 5-minute infomercial video creatively depicting their team’s answer to the driving question. To ensure that students master the economic concepts related to this project, students must also address the supporting questions through their video. • In addition to being evaluated, fellow students also screen and vote on each team’s video. The class selects the best idea for keeping the paparazzi at bay. After selecting the best team idea, each team chooses a celebrity to whom to send the winning video. Each team writes a persuasive letter to their celebrity, explaining the winning idea as well as the assignment, and then sends the letter and video to the celebrity.

7. Project 1 – Photo Hounds • Individually Written Report: • 50 points • After completing the group portion of the project, each student writes a one-page report in which they apply the concepts of incentives and prices to businesses going green. • What incentives influence a business’s decision to go green? • How are prices influenced by a business’s decision to go green?

8. Project 1 – Photo Hounds • Project length – 2 weeks • Jan 20 – Introduction/Group contracts • Jan 21 – Contracts due, Role of Culture notes, Country of Interest Activity • Jan 22 – Begin Photo Hounds research • How to keep paparazzi away • Link economics for paparazzi and celebrity • Brainstorm ideas for video

9. Project 1 – Photo Hounds • Jan 25 – Incentives Notes, Work on Photo Hounds Research/generate ideas • Jan 26 – Videoing the infomercial • HW – Read Soft Drink Article • Jan 27 – Supply and Demand Notes, Soft Drink Article, Photo Hounds work on infomercial • Jan 28 – Prices Notes, CD survey activity • Jan 29 – CD Survey due, Finalize Infomercial Video, Begin individual written report (MLA Format)

10. Project 1 – Photo Hounds • Feb 1 – Class pick celebrity to mail infomercial video, find address, prepare envelop, view each team’s infomercial video, cont. to work on individual written reports • Feb 2 – Individual written reports due, class chooses which infomercial, write letter as a class, mail & wait for a response!

11. Incentives Notes • Self-interest – personal advantage or interest. • Financial incentives – a monetary reward for a specific behavior, designed to encourage that behavior.  • Non-financial incentives – a reward that does not include money.  • Perverse incentives – an incentive that has an unintended and undesirable effect, that is against the interest of the incentive makers.

12. Incentives Notes • Explain why incentives matter (e.g., long-term growth, prevention of market failure, etc.). • Businesses often use economic incentives to encourage people to come and do business with them. Offering incentives is one way to get customers to choose to come and spend money at a business. • Government agencies also use economic incentives, but they usually do it to encourage certain behaviors in people. Offering incentives is one way the government tries to get people to behave responsibly.

13. Incentives Notes • Describe ways to classify incentives. • Economic Incentivesare offered to influence our behavior. • Positive economic incentivesreward people financially for making certain choices and behaving in a certain way. • They reward you with money or some sort of financial gain such as a better price, a free item, or an upgraded item. Coupons, sales, freebies, discounts, and rewards can be positive economic incentives. They are called positive because they are associated with things many people would like to get. • Negative economic incentivespunish people financially for making certain choices and behaving in a certain way. • These incentives cost you money. Fines, fees, and tickets can be negative economic incentives. They are called negative because they are things you don't want to get.

14. Incentives Notes • Identify examples of financial and non-financial incentives. • Monetary (financial)– price and taxes • Higher prices provide incentives for consumers to buy less and producers to sell more. Taxes create incentives to reduce taxed activities. • Nonmonetary (non-financial)– government laws and social customs • Government laws, rules, and regulations create incentives through the threat of punishment. Social customs and religious doctrines provide similar incentives of a more psychological or spiritual nature.

15. Incentives Notes • Describe the impact of social choice on individual incentives. • Traffic Laws • Kidney donations • http://www.econlib.org/library/Columns/y2006/Robertsincentives.html

16. Incentives Notes • Identify examples of perverse incentives. • Example - 19th century paleontologists traveling to China used to pay peasants for each fragment of dinosaur bone (dinosaur fossils) that they produced. They later discovered that peasants dug up the bones and then smashed them into multiple pieces to maximize their payments. • Worksheet and Tic Tac Toe • http://www.econedlink.org/lessons/index.php?lesson=EM390

17. Supply and Demand • Demand – desire for certain good or service supported by the capacity to purchase it. • Law of demand – observation that, as a general rule, the demand for a product varies inversely with its price—lower prices stimulate demand and higher prices dampen it. • Supply – total amount of a product (good or service) available for purchase at any specified price. • It is determined by: • (1) Price: producers will try to obtain the highest possible price whereas the buyers will try to pay the lowest possible price—both settling at the equilibrium price where supply equals demand. • (2) Cost of inputs: lower the input price the higher the profit at a price level and more product will be offered at that price. • (3) Price of other goods: lower prices of competing goods will reduce the price and the supplier may switch to switch to more profitable products thus reducing the supply.

18. Supply and Demand • Law of supply – if demand is held constant, an increase in supply leads to a decreased price, while a decrease in supply leads to an increased price. • Law of supply and demand – economic proposition that, in any free market, the relationship between supply and demand determines price and the quantity produced. A change in either will lead to changes in price and/or amount produced in order to achieve equilibrium in the market. • Buyer's market – a market that has more sellers than buyers; low prices result from this excess of supply over demand; also called soft market; opposite of seller's market. • Seller's market – a market that has more buyers than sellers; high prices result from this excess of demand over supply.

19. Supply and Demand • Elasticity – degree to which supply or demand for a product or service will change as a result of a change in price. • Elastic demand – responsiveness of buyers to changes in price, defined as the percentage change in the quantity demanded divided by the percentage change in price. • Inelastic demand – desire for a product or service that does not vary with increases or decreases in price. Products that are daily necessities, and for which there are few alternatives, tend to exhibit inelastic demand.

20. Supply and Demand • List the conditions required for demand to exist. • Willingness and ability • Range of prices and quantities • Given time period

21. Supply and Demand • Describe how the law of supply and demand affects businesses. • Consumers will buy more of an item at a lower price and less at higher price (demand) • Businesses will offer more for sale at higher prices than at lower prices (supply) Demand curve Supply curve

22. Supply and Demand • Identify factors that affect elasticity. • Availability of Substitutes: The ease of substitution between goods, both in consumption and production, has a big effect on elasticity. • Time Period of Analysis: The longer the time period of analysis, the more responsive quantities are to price changes, for both price elasticity of demand and price elasticity of supply. • Proportion of Budget: The price elasticity of demand depends on the proportion of the budget that buyers devote to a good.

23. Supply and Demand • Explain the importance of understanding elasticity. • Whenever supply or demand for a product fluctuates, the elasticity of the two curves affect the size of the price change. • We can predict how prices are likely to change if we know the elasticity of the curve.

24. Supply and Demand • Describe factors that affect demand. • Buyers' Income: The amount of income that buyers have available to spend affects the ability to purchase a good. • Buyers' Preferences: The satisfaction derived from a good affects the willingness to purchase a good. If buyers like a good more, then they buy more of a good. • Prices of Other Goods: The demand for one good is interrelated with the purchase of other goods, and the prices of those goods. • Buyers' Expectations: Buyers decide how much to purchase based on a comparison of current and expected future prices. • Number of Buyers: The total number of buyers participating in a market affects how much of a good is demanded.

25. Supply and Demand • Describe factors that affect supply. • Resource Prices: The prices paid for the use of resources in the production process affects production cost and the ability to sell a good. • Technology: The information and techniques known about the production process has a direct impact on the ability to sell a good. • Prices of Other Goods: The supply of one good is interrelated with the production of other goods, and the prices of those goods. • Sellers' Expectations: Sellers decide how much to sell based on a comparison of current and expected future prices. • Number of Sellers: The total number of sellers participating in a market affects how much of a good is supplied.

26. Supply and Demand Curve