Consumer Behaviour · SHS3 Economics

Lesson notes

Learning Objectives

Indicator: 3.1.3.LI.2 - Graphically represent the Substitution and Income Effects.

By the end of the lesson, learners can:

Draw a budget line and indifference curve diagram showing the consumer equilibrium before a price change.
Identify and label the substitution effect as the movement along the original indifference curve following a price change.
Identify and label the income effect as the movement from the intermediate point to the final equilibrium on a new indifference curve.
Explain, using a graph, how a fall in the price of a normal good leads to an increase in quantity demanded through both the substitution and income effects.
Present and justify a labelled graph of the substitution and income effects to the class using Microsoft PowerPoint.

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Curriculum details

Strand: Consumers' Rational Decision Making (Strand 1)
Sub-strand: Consumer Behaviour (1.3)
Content standard: 3.1.3.CS.1 - Demonstrate knowledge and understanding of Substitution and Income Effects. 3.1.3.LO.1 Use information from the environment to explain income and substitution effects.
Indicator: 3.1.3.LI.2 - Graphically represent the Substitution and Income Effects.
Suggested placement: Semester 1, Week 5 (Week 5 of the year)
Our suggestion, laid out in curriculum order across three terms of twelve weeks. NaCCA does not fix the week, so follow your school's scheme of learning.
Source document note: The official curriculum document has a fault in this entry, so the curriculum text above is transcribed exactly as printed:

content standard text - p.95 the document prints the content-standard code as "3.1.3.CS1", with no separator before the final digit
content standard text - p.93 the document prints the learning-outcome code as "3.1.3.LO1", with no separator before the final digit
Curriculum reference: NaCCA curriculum document, p. 95

Exemplars (from the NaCCA curriculum)

Collaboration Learning: In a mixed gender and ability groups, illustrate the concepts of substitution and income effects on a graph and present your group work using PowerPoint
Assessment (3.1.3.AS.2). The document marks these depth-of-knowledge levels for this indicator: Level 4 Extended critical thinking and reasoning.
Teaching and Learning Resources:
- Marker
- White board
- White board
- Microsoft Power Point
- Computers
- Projector