Lesson 5 Lesson Plan
52.1999
Economics-in-Marketing CTE Lesson Plan
Lesson Title
Traffic Signal Pricing
Lesson Objective
At the completion of this lesson, students will be able to describe how prices send signals and
provide incentives to buyers and sellers.
Concepts
CTE Concept(s)
Pricing, Competition
Economic Concept(s)
Price, Incentives, Competitive Markets
Economic Standards/Benchmarks
Michigan Career and Technical Education: Marketing
Segment 12
I.D.1 Describe fundamental economic concepts used in marketing.
Michigan Department of Education High School Content Expectations
Social Studies: Economics
1.2.2 Price in the Market. Analyze how prices send signals and provide incentives to buyers and
sellers in a competitive market.
Supplies Needed
Student Handout 1 Pricing Signals and Incentives (1 per student)
Student Handout Answer Key 1 Pricing Signals and Incentives
Student Handout 2 Price That Chevy
Student Handout Answer Key 2 Price That Chevy
Student Handout 3 Short Answer Quiz
Student Handout Answer Key 3 Short Answer Quiz
Glossary
Term MBA Research EconEdLink
Expense(s) The monies that a business spends; also Payments for goods and
called expenditures services.
Incentive A function of relative prices that encourages Any reward or benefit, such as
producers to change and reallocate their money, advantage or good
resources; motivators. feeling, that motivates people
to do something.
Price The amount of money paid for a good, The amount of money that
service, or resource. Marketing element people pay when they buy a
requiring marketers to determine the good or service; the amount
Berrien RESA 1 Economics in Marketing Education II
Lesson 5 Lesson Plan
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amount of money they will ask in they receive when they sell a
exchange for their products. good or service.
Profit Monetary reward a business owner Income received for
receives for taking the risk involved in entrepreneurial skills and risk
investing in a business. taking, calculated by
subtracting all of a firm's
explicit and implicit costs
from its total revenues.
Profit Margin A ratio of net profit (after taxes) divided
by net sales that reflects the profit per
dollar of sales
Revenue Sales or gross income. The money a business
receives from customers who
buy its goods and services.
Not to be confused with
profit.
Berrien RESA 2 Economics in Marketing Education II
Lesson 5 Lesson Plan
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Economics-in-Marketing CTE Lesson Plan
1. Introduce the CTE lesson.
[Grading is left to the discretion of the teacher.]
A. Students will define price in their own words. Ask a few students to share their definition
with the class.
B. Let’s Go Shopping
1. Begin by asking students what they would like to shop for online. Encourage the
students to come to a consensus on the item.
2. Use an online shopping resource (Amazon, Ebay, Google Shopping, or other site) to
search for the item the students chose.
3. Compare items focusing on price.
Discussion #1: Why are there differences in prices? Why are some prices low, some in
the middle, and some higher?
C. Conduct a class discussion about the factors that lead to the determination of prices for
products.
Price: the amount of money that people pay when they buy a good or service; the amount
they receive when they sell a good or service.
Discussion #2: Ask students how businesses determine a price for products. Why are
consumers willing to pay those prices?
Incentive: any reward or benefit, such as money, advantage or good feeling that
motivates people to do something. (NOTE: can also be the fear of penalty that motivates
people)
2. Assess students’ economic awareness as it relates to the CTE lesson.
Student Handout 1: Pricing Signals and Incentives
Student Handout Answer Key 1: Pricing Signals and Incentives
A. Distribute Student Handout 1: Pricing Signals and Incentives.
1. Ask students to write what they believe the definitions of each pricing factor is on
Student Handout 1: Pricing Signals and Incentives. Have students complete the traffic
light.
Berrien RESA 3 Economics in Marketing Education II
Lesson 5 Lesson Plan
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B. Define competitive pricing, expense, revenue, and profit.
Competitive pricing: setting the price of a product or service based on what the competition
is charging.
Expenses: Money that a business spends.
Revenue: The total amount of money earned by a business; income.
Profit: Monetary reward a business owner receives for taking the risk involved in investing
in a business; income left once all expenses are paid.
1. Explain Pricing Signals: Prices send signals to a buyer – similar to the signals a traffic
light sends to a driver. Green light (buy), yellow light (caution – deliberation), and
red light (do not buy). Have students fill in the meaning of each traffic lights signals
on Student Handout: Pricing Signals and Incentives.
Discussion #3: What is the incentive for sellers when pricing goods?
Possible Answers: The incentive for businesses is profit, increasing sales, increasing
market share, and/or developing customer loyalty.
3. Work through the economic lesson as it is embedded in the CTE lesson.
Student Handout 2: Price That Chevy
Student Handout Answer Key 2: Price That Chevy
A. Distribute Student Handout 2: Price That Chevy.
1. Ask students to match the Chevrolet model to the estimated retail price.
2. Compare the price of the Chevrolet Camaro 1LS model to the ZL1 convertible model.
Discussion #4: What do you think the differences are between the two Camaro vehicle
models that lead to almost a $40,000 difference in price?
Optional: Have the students research the two different models and list the technical
differences that lead to the changes in price.
4. Work through related, contextual economic-in-CTE examples.
A. Ask the students to identify their own pricing signals (comparing the signals to a traffic
light).
1. Give an example of a product that a student might purchase. i.e. Red Wings tickets
Berrien RESA 4 Economics in Marketing Education II
Lesson 5 Lesson Plan
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2. For the product that you choose, ask the students to volunteer their purchase price
(green light), the caution price (yellow light), and the price that they are not willing to
pay (red light).
3. Record the student responses on a whiteboard or electronic polling system. Have the
students draw conclusions from the range of prices in each category. Explain how
difficult it is for businesses to price their products.
4. Define profit margin and explain the role of profit margin when a business sets the
price for a product.
Profit Margin: A ratio of net profit (after taxes) divided by net sales that reflects the
profit per dollar of sales
a. When establishing price businesses consider the profit margin needed in order to
meet the profit goals of the business.
5. Work through traditional economic examples.
A. Conduct a discussion on the role price plays as an incentive for buying and selling. Use
the examples below. Ask the students: If I change the price…
1. As examples use a popular soft drink, movie tickets, pair of jeans, a 5-day tropical
vacation, and a car.
2. Introduce a very low price for each item and ask for a show of hands for who would
pay that price.
3. For each item ask students for a show of hands if they would be willing to make the
purchase based on the increase in price in the increments provided. Suggested
increments listed below:
a. Soft drink - $0.25 - $0.50
b. Movie tickets - $1.00
c. Pair of jeans - $5.00
d. Tropical vacation - $25.00 - $50.00
e. Car - $100.00 - $500.00
4. Encourage students to look at the change of interest when the price increases. The
show of hands will decrease as the price increases.
6. Students demonstrate their understanding.
A. Ask the students to identify four hotels to stay at in Los Angeles, California for a given
night.
Berrien RESA 5 Economics in Marketing Education II
Lesson 5 Lesson Plan
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1. Using a travel website (e.g. Orbitz, Kayak, Travelocity) the students must find a hotel
that falls into each of the following price ranges:
a. Less than $99.99 per night (not including taxes)
b. $100.00 to $199.99 per night (not including taxes)
c. $200.00 to $299.99 per night (not including taxes)
d. $300.00 or more per night (not including taxes)
2. For each hotel found in a given price range, have the students identify at least three
incentives for both the business and the consumer for that price and particular night.
7. Formal assessment.
Student Handout 3: Short Answer Quiz
Student Handout Answer Key 3: Short Answer Quiz
A. Complete Student Handout 3: Short Answer Quiz.
Berrien RESA 6 Economics in Marketing Education II
Lesson 5 Lesson Plan
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Standards
Lesson Title
Traffic Signal Pricing
Lesson Objective
At the completion of this lesson, students will be able to describe how prices send signals and
provide incentives to buyers and sellers.
Economic Standards/Benchmarks
Michigan Career and Technical Education: Marketing
Segment 12
I.D.1 Describe fundamental economic concepts used in marketing.
Michigan Department of Education High School Content Expectations
Social Studies: Economics
1.2.2 Price in the Market. Analyze how prices send signals and provide incentives to buyers and
sellers in a competitive market.
MBA Research Performance Indicator(s)
Describe the functions of prices in markets (EC:006, LAP-EC-012) (CS)
Michigan Career and Technical Education: Marketing
Segment: 1
I.A.5 Use correct grammar, punctuation and terminology to write and edit documents.
Segment: 7
IV.B.1 Use information technology tools to manage and perform work responsibilities.
Segment: 8
IV.B.5 Access and navigate internet (e.g. use a web browser)
Segment: 12
X.E.4 Explain factors affecting pricing decisions
Berrien RESA 7 Economics in Marketing Education II
Lesson 5 Lesson Plan
52.1999
References
Chevrolet. (n.d.) Chevrolet.com February 18, 2014. Retrieved from
http://www.chevrolet.com/?seo=ysm_|_GM+Chevy+Retention-X9223686_|_GI-RTN-
Chevrolet-B-SN-BMM_|_Chevrolet_|_+chevrolet
Econedlink: Council for Economic Education. (n.d.). Economic Glossary.
Retrieved from http://www.econedlink.org/economic-resources/glossary.php
MBA dictionary, (n.d.). Retrieved November 15, 2014, from MBAResearch and Curriculum
Center
Berrien RESA 8 Economics in Marketing Education II
