World Economy · Learn with evidence
A three-part teaching sequence with a market table, movable curves, surplus calculations and explained answers.
Free guided activity · 75 minutes · Ages 14 and up
Before you start: Read a graph, multiply and divide; no prior economics course needed.
Learning goal: Distinguish demand from quantity demanded, predict a curve shift, and calculate consumer, producer and total surplus.
Preparation: Paper, pencil and calculator. Allow one shared screen for the linked tool, or use the printed exercise offline. Fictional figures are for practice.
Demand is the whole relationship between price and purchases. Quantity demanded is one amount at a particular price. A product’s own price change moves along a fixed demand curve; changing income or preferences can move the curve. Supply uses the same relationship-versus-point distinction.
Open the terminology and graph →Start with one change at a time in the lab’s guided practice. Predict the effect of a drought on price and quantity before revealing the result. Then try cheaper production and higher income for a normal good. A supply reduction raises equilibrium price and lowers quantity when demand stays fixed.
Try the guided market practice →Consumer surplus is willingness to pay minus price paid; producer surplus is price received minus marginal cost. Their sum measures gains in this competitive model. It is not revenue, accounting profit, or a measure of fairness. External costs and benefits can change the welfare conclusion.
Explore costs outside the market →Fictional competitive market: quantity demanded Qd = 100 − 2P; quantity supplied Qs = 2P. P is dollars per item and Q is items per day. Calculate Qd and Qs at prices $10, $20, $25 and $30. Sketch both lines. Then model a production disruption as Qs = 2P − 20 (use only nonnegative quantities). Keep demand fixed. These equations are a separate worksheet, not the lab’s default calibration.
Find the original equilibrium and the shortage at a fixed price of $20.
After the disruption, what are the new price and quantity? Did demand change?
Calculate original consumer, producer and total surplus.
What if both demand and supply increase?
Exit ticket: Explain one result in your own words and name an assumption that could change it.
Try the worksheet first. These answers explain the reasoning, not just the result.
At equilibrium 100 − 2P = 2P, so P = $25 and Q = 50. At $20, buyers want 60 and sellers offer 40: shortage = 20 items. Desired purchases are not all completed sales.
100 − 2P = 2P − 20 gives P = $30 and Q = 40. Supply decreased. Demand stayed fixed; quantity demanded fell along the same demand curve.
The demand price intercept is $50 and the supply price intercept is $0. Consumer surplus = ½ × 50 × (50 − 25) = $625 per day. Producer surplus = ½ × 50 × (25 − 0) = $625 per day. Total gains = $1,250 per day, assuming competitive trade with no external effects.
Equilibrium quantity rises in the usual model, but price depends on the relative shifts. A single headline about price cannot identify both causes.
Next week: explain why “the price rose, so demand fell” confuses quantity demanded with demand. Draw a new example without looking at the notes.
For a younger learner, work through the first calculation together. For an extension, change one assumption and defend the new conclusion.
See the related optional paid teaching pack →The complete activity above is free. The linked pack is a separate resource; this activity does not change its contents.
World Economy’s original exercises apply the concepts in these sources. Reviewed September 13, 2026. This is educational background, not a live event report.