Sample lesson from I Think: Economics What is Economics? Correlates to Common Core Standards!!

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1 Getting in the Game Sample lesson from I Think: Economics What is Economics? Correlates to Common Core Standards!! Objective: The student will be able to describe the various degrees of competition that can exist in an economy. Materials: US Government v. Microsoft (Springboard handout) Pete s Garage (handout) Sizing Up the Competition (handout) Terms to know: Vocabulary development always an emphasis! anti-trust - laws that stop monopolies from forming or existing monopoly - a business which controls all the selling of a good or service competition - rivalry between companies for sales of similar goods or services oligopoly - a business where there are just a few sellers of a good or service natural monopoly - a business with only one seller; allowed because it would be too expensive (or insufficient demand) for other sellers to compete Procedure: While reviewing the Springboard, explain that the two sides finally agreed to a settlement in According to the agreement, Microsoft agreed to pay millions of dollars to individuals and businesses claiming to have been harmed by the company. The company also agreed to share its technology with competitors and allow competing software to be installed along with Windows on new computers. However, discussion of the case continues and appeals to higher courts may yet be heard. Go on to explain that in this lesson the student(s) will learn more about monopolies. Distribute Pete s Garage and have the student(s) work individually, in pairs, or small groups to read the scenario and brainstorm answers to the questions. Then hand out Sizing Up the Competition. Student(s) should conduct research to complete the graphic organizer. Have them share their answers and discuss. (Answers will vary and should be wellreasoned.) Include the following questions in the follow-up discussion:? Why is it important for some degree of competition to exist? (In general if there s no competition, buyers have no choice and will likely have to pay higher prices for possibly lower-quality goods and services.)? As a general rule, is it fair to say the more sellers the better? (Answers may vary. More sellers usually have to compete by offering lower prices and / or better service. However in some cases tough competition can force some sellers out of business.) Easy-to-follow directions with points to emphasize!

2 Lesson-specific warm-ups introduce students to the topic and maximize on-task time! Beginning in 1998, Microsoft became involved in a court case, accused of breaking anti-trust laws. The suit alleged that founder Bill Gates and his company used business practices intended to establish and maintain a monopoly on computer operating systems for PC s (personal computers). The case was finally settled but debate over it continues. At the center of the government s case was the charge that the software giant stifled competition by bundling its Internet Explorer browser with its Windows operating system. Anti-trust laws prohibit a company from blocking competition in the marketplace by, for example, forcing consumers to buy an unrelated product to get one that is desired. The government argued that bundling Internet Explorer with Windows violated the law. By including the internet browser with its operating system, Microsoft was able to block other company s efforts to establish their share of the browser market, at the same time strengthening its Windows sales. Microsoft fought the case long and hard, arguing that it did not intend to become a monopoly. According to the anti-trust laws, they argued, they would have had to have tried to buy out competitors or purposely try to form a monopoly to have broken the law. Microsoft claims its monopoly, which the government says exists, was achieved by luck and could end at any time if another company developed a better software package. According to its attorneys, Microsoft s crime was filling a need that was not being met in the market. Big companies such as IBM and Apple also made personal computers but Microsoft s success came by developing the simple operating system called Windows. The company argued others could have developed such systems but chose to compete in hardware rather than software sales. Gates lawyers also argued that giving away an Internet browser did not harm other companies, because most web browsers are downloaded free anyway. Therefore by giving away Internet Explorer with the Windows purchase, Microsoft wasn t taking any money away from other companies. Which definition of the word suit best fits its use in the first paragraph? A. set of clothes C. legal proceedings B. go well with D. set of cards Which of these statements is supported by the passage? A. Microsoft conspired to build a monopoly in the software market. B. Bill Gates and his company were very successful in the 1990 s. C. Before Microsoft, software companies were not very successful. D. In the U.S. monopolies are allowed as long as they are successful. What do you think the outcome of this case was? Do you agree with the arguments for the U.S. or for Microsoft? Why? Questions require critical reading for test preparation within the context of the lesson!

3 Beginning in 1998, Microsoft became involved in a court case, accused of breaking anti-trust laws. The suit alleged that founder Bill Gates and his company used business practices intended to establish and maintain a monopoly on computer operating systems for PC s (personal computers). The case was finally settled but debate over it continues. At the center of the government s case was the charge that the software giant stifled competition by bundling its Internet Explorer browser with its Windows operating system. Anti-trust laws prohibit a company from blocking competition in the marketplace by, for example, forcing consumers to buy an unrelated product to get one that is desired. The government argued that bundling Internet Explorer with Windows violated the law. By including the internet browser with its operating system, Microsoft was able to block other company s efforts to establish their share of the browser market, at the same time strengthening its Windows sales. Microsoft fought the case long and hard, arguing that it did not intend to become a monopoly. According to the anti-trust laws, they argued, they would have had to have tried to buy out competitors or purposely try to form a monopoly to have broken the law. Microsoft claims its monopoly, which the government says exists, was achieved by luck and could end at any time if another company developed a better software package. According to its attorneys, Microsoft s crime was filling a need that was not being met in the market. Big companies such as IBM and Apple also made personal computers but Microsoft s success came by developing the simple operating system called Windows. The company argued others could have developed such systems but chose to compete in hardware rather than software sales. Gates lawyers also argued that giving away an Internet browser did not harm other companies, because most web browsers are downloaded free anyway. Therefore by giving away Internet Explorer with the Windows purchase, Microsoft wasn t taking any money away from other companies. Which definition of the word suit best fits its use in the first paragraph? A. set of clothes C. legal proceedings * B. go well with D. set of cards (If the word suit is replaced by each definition, only Choice C makes sense.) Which of these statements is supported by the passage? A. Microsoft conspired to build a monopoly in the software market. B. Bill Gates and his company were very successful in the 1990 s. * C. Before Microsoft, software companies were not very successful. D. In the U.S. monopolies are allowed as long as they are successful. (There is not enough information to support Choice A or C, and D is false.) What do you think the outcome of this case was? Do you agree with the arguments for the U.S. or for Microsoft? Why? Answers will vary and should be justified. (The actual outcome is explained in the lesson Procedures. ) Teacher answers model critical thinking and test-taking strategies!

4 DIRECTIONS: Read the story and answer the questions below The town of Centerville has one gas station owned by Pete the mechanic, aptly called Pete s Garage. Pete opened the garage twenty years ago and has been selling gasoline and doing auto repairs for townspeople since. In recent years the population of the town has grown as many new families have moved to Centerville. People now have to wait days to get their cars fixed, so John is thinking about opening his own garage on the opposite end of town. John has worked for Pete for years, so he has experience and knows all the customers. What advantages will Pete have over John? What can John do to overcome those disadvantages? Content is linked to real-life scenarios! Make your lessons relevant to their lives! In what ways does it benefit Centerville to have only one garage? In what ways is it a disadvantage for Centerville to have only one garage? What advice would you offer to John to make his garage a success? What advice would you offer Pete?

5 The town of Centerville has one gas station owned by Pete the mechanic, aptly called Pete s Garage. Pete opened the garage twenty years ago and has been selling gasoline and doing auto repairs for townspeople since. In recent years the population of the town has grown as many new families have moved to Centerville. People now have to wait days to get their cars fixed, so John is thinking about opening his own garage on the opposite end of town. John has worked for Pete for years, so he has experience and knows all the customers. What advantages will Pete have over John? Answers may vary. Pete already has many loyal customers, is very knowledgeable about running a garage business, and has established relationships with suppliers that provide him gasoline, auto parts, oil, etc. He also probably has more money from years of being the only supplier in town, name recognition, etc. What can John do to overcome those disadvantages? Answers may vary. John could add something to his garage that Pete doesn t have to attract customers such as a convenience store, car wash, fast food restaurant, etc. He can offer faster service by adding more staff or gas pumps so that people don t have to wait so long for service. Also, he can offer slightly lower prices for self-service or offer coupons or deals to entice people to give his garage a try. In what ways does it benefit Centerville to have only one garage? Answers may vary. Some students may see it as a benefit because the townspeople don t have to shop around for the best option. Other possible benefits may include a personal relationship with the owner, people trust his reputation, possibly cheaper prices since Pete doesn t have to advertise, etc. In what ways is it a disadvantage for Centerville to have only one garage? Answers may vary. Students should see that the lack of choice in garage service means Pete can charge higher prices. In addition, if his service declines, people would have no place else to get their cars fixed, without driving to another town. Therefore, they would have no choice but to accept higher prices or lesser service. Students may also cite the long wait times for service. What advice would you offer to John to make his garage a success? What advice would you offer Pete? Answers may vary, but students will likely think John will have to figure out a way to offer better service and/or lower prices to get longtime loyal customers to try his new garage (perhaps by trying some of their ideas from above.) Students may have similar advice for Pete in order for him to keep his longtime customers and avoid them going to John s garage. Reflective, open-ended questions allow less-able students to participate and advanced students to stretch their minds!

6 Market structure refers to the amount of competition that exists in an industry or market. Research the various market structures below and fill in the empty boxes with your ideas. InspirEd lessons always take it to the next level by requiring students to synthesis what they ve learned! Competitive: Many sellers Oligopoly: A few sellers Students use problem-solving and a variety of other enduring skills! Monopoly: One seller NATURAL MONOPOLY: One seller when more than one seller would be too expensive or inefficient