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