Demand and Supply, Influencing Factors, Market Equilibrium for SS 1

Class: SS 1
Term: Third Term
Week: 5
Age: 15 years
Duration: 60 minutes
Subject: Economics
Curriculum Theme: Business Organization
Focal competence: Using the dynamics of the forces of demand and supply to analyze real life market situation
Key competencies/values: Collaboration
Skills:

• Determining the dynamics of market prices in relation to demand and supply

Previous Lesson: Demand and Supply, Schedules and Laws
Topic: Theory Of Demand And Supply: Factors Affecting Demand And Supply
Subject Matter: Factors affecting demand and supply, Determination of equilibrium quantity and price

Specific Objectives

By the end of the lesson, pupils/students should be able to:

Cognitive Domain

• State the laws of demand and supply.
• Explain factors that affect demand.
• Explain factors that affect supply.
• Define market equilibrium.
• Determine the equilibrium price and quantity from given data.

Affective Domain

• Appreciate the importance of demand and supply in real-life market situations.
• Collaborate effectively in group activities to analyse market trends.

Psychomotor Domain

• Label demand and supply curves accurately.
• Draw simple demand and supply diagrams to illustrate the laws.
• Use a given set of data to plot demand and supply curves and identify equilibrium.

Social Domain

• Participate actively in discussions about market dynamics.
• Share ideas and insights on how economic factors influence consumer choices and business decisions.

Reference Materials

The following resources were used in planning this lesson:

• 2025 New Revised Senior Secondary Education Curriculum (SSEC)
• Relevant State Unified Scheme of Work
• Any standard Senior Secondary School Economics textbook for SS 1
• The HeadTeacher Scheme of work For The New Revised Senior Secondary Education Curriculum (SSEC)

Instructional Materials

The teacher will teach this lesson with the aid of:

• Textbooks
• Graph papers and rulers
• Posters and visuals showing demand and supply curves
• Newspaper clippings on real market trends (e.g. petrol prices, food inflation)
• Whiteboard/Blackboard and markers/chalk
• Simple items for classroom game (e.g., candy, pens)

Rationale for the Lesson

Understanding demand and supply is fundamental to economics, as it explains how prices and quantities of goods and services are determined in a market. This lesson helps students analyse real-life market situations, linking economic concepts to everyday incentives, choices, and household or business decisions. It provides a foundation for further study in microeconomics and helps students interpret economic news and trends.

Prerequisite/Previous Knowledge

Students should have a basic understanding of economic concepts such as goods, services, consumers, producers, and markets.

Lesson Content/Board Summary

Theory Of Demand And Supply: Factors Affecting Demand And Supply

Demand

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a specific period.

Law of Demand

The Law of Demand states that, all other factors remaining constant (ceteris paribus), as the price of a good increases, the quantity demanded for that good decreases, and vice versa. This shows an inverse relationship between price and quantity demanded.

Demand Curve: A demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded. It typically slopes downwards from left to right, indicating that as price falls, quantity demanded rises.

Factors Affecting Demand (Determinants of Demand)

These are factors that can cause a shift in the entire demand curve, either to the left (decrease in demand) or to the right (increase in demand).

1. Price of the Commodity: As explained by the Law of Demand, a change in price leads to a movement along the demand curve, not a shift of the curve.
2. Income of the Consumer: For normal goods, an increase in consumer income leads to an increase in demand (e.g., demand for quality clothing in Nigeria increases with higher income). For inferior goods, an increase in income leads to a decrease in demand (e.g., demand for cheaper, low-quality food items might fall as income rises).
3. Price of Related Goods:
   1. Substitutes: Goods that can be used in place of each other. If the price of a substitute good increases, the demand for the original good increases (e.g., if the price of rice increases, the demand for garri might increase).
   2. Complements: Goods that are consumed together. If the price of a complementary good increases, the demand for the original good decreases (e.g., if the price of petrol increases, the demand for cars might decrease).
4. Tastes and Preferences: Changes in consumer tastes or preferences can increase or decrease demand (e.g., a new fashion trend can increase demand for certain clothing styles).
5. Expectations of Future Prices: If consumers expect prices to rise in the future, current demand might increase (e.g., people buying fuel now if they expect a price hike tomorrow).
6. Population Size: An increase in population generally leads to an increase in overall market demand for most goods and services.
7. Government Policy/Taxation: Government policies like taxes or subsidies can affect demand. For example, a tax on luxury goods might reduce their demand.

Supply

Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at various prices during a specific period.

Law of Supply

The Law of Supply states that, all other factors remaining constant (ceteris paribus), as the price of a good increases, the quantity supplied for that good also increases, and vice versa. This shows a direct relationship between price and quantity supplied.

Supply Curve: A supply curve is a graphical representation of the relationship between the price of a good and the quantity supplied. It typically slopes upwards from left to right, indicating that as price rises, quantity supplied rises.

Factors Affecting Supply (Determinants of Supply)

These are factors that can cause a shift in the entire supply curve, either to the left (decrease in supply) or to the right (increase in supply).

1. Price of the Commodity: A change in price leads to a movement along the supply curve, not a shift of the curve.
2. Cost of Production: If the cost of inputs (e.g., raw materials, labour, electricity in Nigeria) increases, producers will supply less at each price, shifting the supply curve to the left.
3. Technology: Improvements in technology can lower production costs and increase efficiency, leading to an increase in supply (e.g., better farming techniques increasing crop yield).
4. Price of Other Goods: If the price of another good that a producer can make increases, they might shift resources to produce that good, decreasing the supply of the original good.
5. Government Policy (Taxes and Subsidies): Taxes on production increase costs and reduce supply, while subsidies reduce costs and increase supply (e.g., government subsidies to farmers can boost food supply).
6. Expectations of Future Prices: If producers expect prices to rise in the future, they might hold back some current supply to sell later at a higher price, decreasing current supply.
7. Number of Sellers: An increase in the number of firms in an industry will lead to an increase in the total market supply.
8. Natural Factors: For agricultural products, favourable weather conditions lead to increased supply, while adverse conditions (e.g., floods, droughts) reduce supply.

Market Equilibrium

Market equilibrium is a state where the quantity demanded by consumers equals the quantity supplied by producers at a particular price. At this point, there is no tendency for the price to change.

1. Equilibrium Price: The price at which quantity demanded equals quantity supplied.
2. Equilibrium Quantity: The quantity demanded and supplied at the equilibrium price.

Determination of Equilibrium Price and Quantity

Equilibrium can be determined using a demand and supply schedule (table) or by plotting the demand and supply curves on a graph.

Example: Determining Equilibrium

Consider the following demand and supply schedule for a product:

From the table, the equilibrium occurs where Quantity Demanded = Quantity Supplied.

1. At a price of ₦30, Quantity Demanded is 30 units and Quantity Supplied is 30 units.
2. Therefore, the Equilibrium Price is ₦30.
3. The Equilibrium Quantity is 30 units.

Diagrammatic Representation of Equilibrium

When the demand curve (downward sloping) and the supply curve (upward sloping) are plotted on the same graph, their intersection point represents the market equilibrium. The price at this intersection is the equilibrium price, and the quantity is the equilibrium quantity.

Note:

• If the price is above equilibrium, there is a surplus (quantity supplied > quantity demanded), which will force prices down.
• If the price is below equilibrium, there is a shortage (quantity demanded > quantity supplied), which will force prices up.

Teaching Methods/Instructional Techniques

Discussion, Explanation, Question and Answer, Demonstration, Guided Practice, Group Work, Practical Activity.

Instructional Procedures

Step 1: Introduction

Time: 5 minutes

Teaching Skill: Activating Prior Knowledge

Teacher’s Activity: The teacher greets the students and asks them to recall what they understand by “market” and how prices are generally determined for goods they buy daily. The teacher then introduces the topic: “Theory of Demand and Supply: Factors Affecting Demand and Supply.”

Pupils’ Activity: Pupils respond to questions about markets and price determination, then listen attentively to the introduction of the topic.

Learning Point: Introduction to demand and supply

Step 2: Law of Demand and Demand Curve

Time: 10 minutes

Teaching Skill: Explanation/Demonstration

Teacher’s Activity: The teacher explains the concept of demand and states the Law of Demand, using simple examples like the price of bread or sachet water. The teacher then guides students to draw a simple demand schedule and sketch a demand curve on the board, explaining its downward slope. The teacher can use a simple classroom game (e.g., offering candy at different prices) to demonstrate the Law of Demand.

Pupils’ Activity: Pupils listen, ask questions, participate in the classroom game, and observe how the demand curve is drawn and labelled.

Learning Point: Law of Demand and curve

Step 3: Factors Affecting Demand

Time: 10 minutes

Teaching Skill: Discussion/Examples

Teacher’s Activity: The teacher discusses various factors that affect demand, such as consumer income, prices of related goods (substitutes and complements), tastes, expectations, and population size. The teacher provides relevant Nigerian examples for each factor (e.g., impact of fuel price on demand for transport, effect of salary increase on demand for goods). The teacher explains how these factors cause a shift in the demand curve.

Pupils’ Activity: Pupils contribute to the discussion, provide their own examples, and ask clarifying questions.

Learning Point: Determinants of demand

Step 4: Law of Supply and Supply Curve

Time: 10 minutes

Teaching Skill: Explanation/Demonstration

Teacher’s Activity: The teacher explains the concept of supply and states the Law of Supply, using examples like farmers supplying yam or producers supplying soft drinks. The teacher then guides students to draw a simple supply schedule and sketch a supply curve on the board, explaining its upward slope. The teacher can use a simple classroom game (e.g., asking students how many pens they would sell at different prices) to demonstrate the Law of Supply.

Pupils’ Activity: Pupils listen, ask questions, participate in the classroom game, and observe how the supply curve is drawn and labelled.

Learning Point: Law of Supply and curve

Step 5: Factors Affecting Supply

Time: 5 minutes

Teaching Skill: Discussion/Examples

Teacher’s Activity: The teacher discusses factors affecting supply, such as cost of production, technology, prices of other goods, government policies (taxes/subsidies), expectations, and natural factors. The teacher uses Nigerian examples (e.g., impact of petrol price on transport costs for goods, effect of improved farming technology). The teacher explains how these factors cause a shift in the supply curve.

Pupils’ Activity: Pupils listen, contribute examples, and understand how supply shifts.

Learning Point: Determinants of supply

Step 6: Market Equilibrium

Time: 5 minutes

Teaching Skill: Guided Practice

Teacher’s Activity: The teacher defines market equilibrium, equilibrium price, and equilibrium quantity. Using the example schedule from the Board Summary, the teacher guides students to identify the equilibrium price and quantity. The teacher also explains how to represent equilibrium diagrammatically, showing the intersection of demand and supply curves.

Pupils’ Activity: Pupils follow the teacher’s guidance, identify equilibrium from the schedule, and understand its graphical representation.

Learning Point: Determining market equilibrium

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. State the Law of Demand and the Law of Supply.
2. Mention three factors that affect demand.
3. Mention three factors that affect supply.
4. Given a demand of 50 units and supply of 50 units at ₦20, what is the equilibrium price and quantity?

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Understanding demand and supply concepts

Step 8: Note-Taking

Time: 10 minutes

Teaching Skill: Guided Writing

Teacher’s Activity: The teacher guides pupils/students to copy the essential Board Summary notes on demand, supply, their factors, and market equilibrium into their notebooks.

Pupils’ Activity: Pupils/students copy the notes carefully into their notebooks.

Learning Point: Recording lesson notes

Step 9: Conclusion

Time: 5 minutes

Teaching Skill: Consolidation

Teacher’s Activity: The teacher summarises the key points of the lesson, reiterating the inverse relationship in demand, direct relationship in supply, and how their interaction determines market equilibrium. The teacher encourages students to observe these principles in real-life markets.

Pupils’ Activity: Pupils listen and ask any final questions for clarification.

Learning Point: Consolidation of market forces

Continuous Assessment/Further Study

Type: Homework/Practice Exercise

Instruction: Answer the following questions in your notebook.

1. Define demand and supply in your own words.
2. Draw a diagram to illustrate the Law of Demand and another for the Law of Supply.
3. List five factors that can cause a shift in the demand curve for mobile phones in Nigeria.
4. List five factors that can cause a shift in the supply curve for crude oil.
5. Given the following schedule for oranges:
   

   Price (₦)	Quantity Demanded	Quantity Supplied
   50	100	20
   60	80	40
   70	60	60
   80	40	80

   Determine the equilibrium price and quantity for oranges.

Lesson Keywords

• Demand – The quantity of a good consumers are willing and able to buy at various prices.
• Supply – The quantity of a good producers are willing and able to sell at various prices.
• Law of Demand – Inverse relationship between price and quantity demanded.
• Law of Supply – Direct relationship between price and quantity supplied.
• Demand Curve – Downward-sloping graph showing price and quantity demanded.
• Supply Curve – Upward-sloping graph showing price and quantity supplied.
• Equilibrium Price – Price where quantity demanded equals quantity supplied.
• Equilibrium Quantity – Quantity demanded and supplied at equilibrium price.
• Ceteris Paribus – All other factors remaining constant.
• Substitutes – Goods used in place of another.
• Complements – Goods consumed together.

Differentiation

For students who grasp concepts quickly, encourage them to research current events in Nigeria where changes in demand or supply have affected prices (e.g., petrol price changes, food inflation) and present their findings. For students needing more support, provide additional guided practice with simpler demand and supply schedules and visual aids to reinforce the inverse and direct relationships.

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