| The Law that Rules is the article written by | | | | quantity demanded at each given price. It can |
| Steven Rosen and posted in "kansascity dot | | | | be represented on a graph as a line or curve |
| com" on March 27, 2005. Steven Rosen once a | | | | by plotting the quantity demanded at each |
| month offers basic economic concepts that can | | | | price. It can also be described |
| be easily explained to kids, so they can form | | | | mathematically by a demand equation. The main |
| their vision of how the real-adult world | | | | determinants of the quantity one is willing |
| works. This time Rosen's ninth installment | | | | to purchase will typically be the price of |
| (that is the way he calls his articles; | | | | the good, one's level of income, personal |
| altogether there will be twelve installments) | | | | tastes, the price of substitute goods, and |
| explained the basic rule of economics: the | | | | the price of complementary goods. |
| rule of supply and demand. He explains the | | | | |
| law of supply and demand using dolls, stuffed | | | | To make this concept simpler to children the |
| animals, trading cards, plastic wristbands | | | | author suggests asking children questions |
| and other things that kids like to collect. | | | | about the things that they collect. For |
| Kids' collectibles are the things that they | | | | instance, ask why some particular toy is |
| will be most willing to spend their money on. | | | | special and more valuable than another one. |
| | | | The answer would probably be that particular |
| The topic of supply and demand was chosen | | | | items are limited or have unique design. Then |
| because it is a necessarily starting point | | | | Rosen proposes to go further and question |
| for understanding how the prices are formed. | | | | kids what their actions would be if their |
| As examples that will be easily | | | | friends or neighbors had an identical toy. |
| comprehendible by kids the author uses prices | | | | Would they desire to exchange it? For how |
| for pizza, toys, and iPods. Kids would buy | | | | much would they price it? If, on the other |
| all those things with their money, so it is a | | | | hand, only one friend had it, would it |
| real life example that is closer to them than | | | | increase the demand and what would the price |
| for example the formation of prices for oil. | | | | be in that case? Rosen also tells to |
| | | | construct open-ended questions for kids, this |
| Rosen explains supply as the amount of a | | | | way kids receive an opportunity to present |
| product or service that a business is willing | | | | their vision of the situation which |
| to offer for sale; and demand as how much | | | | significantly speeds up their understanding |
| purchasers would buy and what they'd pay. | | | | of the market. By using the examples that |
| Supply deals with production and demand with | | | | Rosen suggests, kids automatically get the |
| desire and popularity. Rosen is pretty close | | | | idea of the price elasticity of demand and |
| in his explanations, however, if we want to | | | | price elasticity of supply. |
| be precise in definitions then we will have | | | | |
| supply as the quantity that producers are | | | | The author also gives other suggestions of |
| willing to sell at a given price. For | | | | explaining the rule of demand and supply. One |
| instance, the soft drink manufacturer may be | | | | of the cases is the formation of prices for |
| willing to produce 1 million packages of some | | | | fuel. Actually, supply and demand is only the |
| soft drink if the price is $1 and | | | | part components that set the price. But the |
| significantly more if the market price is $2. | | | | discussion can be focused on driving habits, |
| The core determinants of the amount of | | | | cutting off the not necessary driving, drive |
| packages of a soft drink that a company is | | | | a more fuel-efficient vehicle. |
| willing to produce will generally be the | | | | |
| market price of the good. Demand is the | | | | The number of topics that can be used for |
| quantity that consumers are willing and able | | | | discussion is countless; what the author |
| to buy at a given price over a period of | | | | thinks really important is to keep a child |
| time. For an illustration, a consumer may be | | | | interested and at the same time entertained |
| willing to purchase 30 packages of a soft | | | | by the conversation which will help the |
| drink in the next year if the price is $1 per | | | | process of understanding. The kids' awareness |
| bag, and may be willing to purchase only 10 | | | | of such basic economic issues plays an |
| bags if the price is $2 per package. A demand | | | | essential role in how they will manage their |
| schedule can be constructed that shows the | | | | funds in the future. |