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LESSON: SOLD!
Lesson
Plan Summary: A boy goes with his father to an auction
one day. A irritating moth causes the boy to bid and purchase -
far more than his allowance can stand, but alls well that ends well when
he discovers that one of his inadvertent purchases is a painting by none
other than Vincent Van Gogh!
Concept:
Price
Definition:
The price is what
people pay when they purchase a good or service or what they receive when
they sell a good or service. Market prices are determined by the
buying and selling decisions of consumers and producers.
Specialization
increases the amount of goods and services that people produce and
consume.
Comprehension
Questions:
What
is an auction? How are prices determined in an auction?
An
auction is a market where people in the audience bid on items offered for
sale. Prices are determined by the interaction of supply (the item
offered) and demand (the bids of consumers in the audience).
If
the demand for an item is very high from bidders, what will happen to the
price?
It will rise. If demand is very low, the price will
tend to fall. In some auctions, the sellers demand a minimum price,
and if the final auction price is not high enough, the item is withdrawn
from sale.
What
does a price reflect in terms of the economic concept of
scarcity?
In any market, like this auction, prices reflect the
relative scarcity of an item compared to other items. For example, a
high price indicates that an item is very scarce compared to others
items. A low price indicates that it is not very scarce compared to
other items.
Why
was the boy bidding on the many auction items?
He really
wasnt! He was responding to an irritating moth and bought the items
by mistake!
What
price did the man with a moustache pay for the Van Gogh painting?
Why did he pay so much?
$28,000,000. There was only one like
it, and because Van Gogh is so famous, lots of people want to buy his
paintings. In other words, the painting was very scarce, and
the price reflected that.
What
might cause the price of the Van Gogh painting to change in the
future?
The supply of that particular painting cant change its
unique. However, the demand can definitely change, and this will
change the price. For example, Van Gogh could become more or less
popular as an artist. Or, if there was a lot of inflation, people
would buy more hard assets like art, gold, and jewels. This would
cause the price of the painting to rise.
Have
you ever been to an auction? Explain what
happened.
Answers will vary.
Other
Concepts: Supply and
Demand, Scarcity | 
