Smart Consumers, Smart Choices
Procedures for teachers is divided into four sections: Prep
-- Preparing for the lesson Steps
LESSON 1 (RECORDING ARTIST)
LESSON 2 (MP3 Players)
LESSON 3 (FINAL ANALYSIS)
-- Additional activities
- Modem: 56.6 Kbps or faster.
- Browser: Netscape Navigator 4.0 or above or Internet Explorer 4.0 or above. Macintosh computer: System 8.1 or above and at least 32 MB of RAM.
- Personal computer (Pentium II 350 MHz or Celeron 600 MHz) running Windows ® 95 or higher and at least 32 MB of RAM.
- Software: Any presentation software such as Power Point or Hyperstudio (optional).
Before teaching this lesson, bookmark all of the Web sites used in the lesson on each computer in your classroom, create a word-processing document with all of the Web sites listed as hyperlinks, upload all links to an online bookmarking utility such as www.portaportal.com
, or make paper handouts of necessary Web pages so that students can access the information on these sites. (Note: It's a good idea to preview these sites before presenting them to your class.) Make sure that your computer has necessary media players, like RealPlayer, to show streaming clips (if applicable).
Preview all of the sites and videos before presenting them to your class.
Teachers will need the following supplies:
- Board and/or chart paper
- Ideally a screen on which to project the video clips
- Copy of the IN THE MIX episode, "Consumer Smarts"
- Handouts of Web resources if computers are not available in the classroom
- Copies of the How Smart Consumers Make Smart Choices student organizer
Students will need the following supplies:
- Computers with the capacities indicated above
- Notebook or journal
--LESSON 1 (RECORDING ARTIST)--
Goal: Engage the students' interest by talking about popular recording stars. Students also should begin to have an understanding of the process of obtaining a recording contract.
- Open the discussion by talking about students' favorite recording artists, and how they may have gotten their start.
- Ask if any of the students play music, and/or would like to be a recording artist one day.
- Find out if any of the students know the process of producing a demo tape for a recording company.
Goal: to brainstorm different aspects of an economic analysis and to provide terms of the components of that type of analysis.
- Watch the IN THE MIX segment on producing a music demo tape. Start the tape about three minutes into the segment where the young man says, "Hey, what's up? I'm Julio." Continue the segment until it ends.
- As students watch the tape, ask them to record the following on the How Smart Consumers Make Smart Choices student organizer:
- Methods for producing a demo tape
- Different costs of producing a 4-track tape
- Different costs of producing an 8-track tape
- Factors that impact the cost of each type of production
- Likelihood that each tape will yield a recording deal
- When the segment is over, have the class discuss each of the above points and come to some kind of a consensus on each. Write these on the board.
- Next, begin a discussion of the types of market forces that would impact the answers to the above questions. To start, define the following on the board:
- Supply: The quantity supplied of a good is the amount sellers are willing to sell within a period of time. According to economic law, the price of an item will generally go down if the supply increases, and will go up if the supply decreases.
- Demand: The quantity demanded of a good is the amount that buyers are willing to buy within a period of time. According to economic law, the price of an item will generally go up if demand increases, and will generally go down if demand decreases.
- Cost-benefit analysis: Evaluates a project by comparing its benefits as a whole with the costs of undertaking it.
- Opportunity costs: The alternatives that must be given up in order to obtain any specific good or service. When you make any economic decision, you are also giving up on alternative opportunities you could have taken. This concept looks at the hidden costs of any and every economic decision.
- Self-regulation: To set and manage goals through a reasonable assessment of risks, perseverance, and a self-appraisal.
Goal: for the class to utilize its new-found knowledge to create a framework for analysis. They can then apply the framework to the demo-tape segment that they watched earlier.
Ask students to take out the How Smart Consumers Make Smart Choices
- Given the framework of economic concepts defined above, begin to assess the market forces that impact producing a demo tape, and being chosen by a record company.
- Supply and demand: Where do students see these forces at play?
- Cost-benefit analysis: Who is doing this analysis, and why is it critical?
- Opportunity costs: What types of opportunity costs, financial and otherwise (including time), does each party have in this scenario?
- Self-regulation: How might self-regulation help one make a reasonable decision?
- Develop a framework with the class to assess these factors. Ask the class the following questions to determine the most economical option for producing a demo tape.
- Given the market forces of supply and demand, where do students see the most supply of recording studios?
- What are the opportunity costs of doing a demo tape?
- What are the financial and time costs of doing a demo tape? Are there other costs? What are the realistic benefits? Do the benefits outweigh the costs, or vice versa?
- What types of self-regulation can be employed in this scenario to ensure that the best decision is made?
- Using the framework, ask for volunteers to express which would be the most cost-effective way to produce a SUCCESSFUL demo tape.
--LESSON 2 (MP3 Players)--
Goal: to make sure that students have a preliminary understanding of the costs of buying an MP3 player, and to bring them into the lesson by personalizing the information.
- Open the discussion by talking about who in the class has an MP3 player, and why they are an attractive product.
- Poll students to find out which MP3 player is currently the most popular among their age group.
- See if students have any sense of what MP3 players cost, including the range of price of different brand names.
- Finally, ask for a show of hands of who would consider buying an MP3 player, and who doesn't think it's worth the cost. Of those who would buy one, ask who would buy the most popular brand. Record the votes on the board.
- Have students research the cost of at least two different MP3 players on the Web. As students do their research, have them record the different brands and the costs of each brand they find, using the How Smart Consumers Make Smart Choices student organizer.
NOTE: If you have access to computers conduct this during class time. If you do not have access to computers have the students conduct this research as homework. It is recommended that you give them a time limit of 30 minutes for the Web research.
- When they have completed their research, have a class discussion about the different brands of players, how much they cost and which are the most popular among teenagers. Write these on the board.
--LESSON 3 (FINAL ANALYSIS)--
- Using the framework for economic analysis established in the previous class, assess the following market forces regarding the costs of MP3 players. Ask students to record the answers to the following on the How Smart Consumers Make Smart Choices student organizer and than ask for volunteers to share their answers. Record some of the answers from the student organizer on the board.
- Given the market forces of supply and demand, where do students see the most demand and supply for MP3 players?
- What are the opportunity costs of buying an MP3 player? What could that money be used for instead?
- What are the benefits to owning an MP3 player? Do the benefits outweigh the costs, or vice versa?
- What types of self-regulation can be employed in this scenario to ensure that the best decision is made?
NOTE: In addition to providing a convenient way of storing music, some MP3 players offer additional benefits such as the ability to download different types of audio, like foreign language lessons that can be listened to at a user's convenience. Some MP3 players allow users to also capture audio, for instance students could record lectures or create a "pod cast." Visit http://en.wikipedia.org/wiki/Podcasting for a definition of "pod casting."
- Ask for a show of hands of who would consider buying an MP3 player, and who would definitely not get one. Record the votes on the board, and see if anyone changed a vote post-analysis.
- Finally, ask for a show of hands of students who would still like to purchase an MP3 player, but would forego the most popular model for the cost savings of a cheaper model.
- Ask the students who changed their vote since the economic analysis to explain how the analysis impacted their decision.
- Review the two previous days' classes by discussing how an economic analysis was used to determine the best way to make a demo tape, and whether or not to buy an MP3 player.
- Explain that today's lesson is going to bring in one additional type of analysis, which is the comparison of saving vs. spending. Ask how many students save and/or invest money.
- Discuss the concept of "compound interest" and how money can grow when saved and invested effectively.
- Divide students into four groups. They should include:
Each group has to put together a financial analysis of their decision to spend or save with the following components:
- Up-and-Coming Musicians
- Musician Accountants
- MP3 Player Consumers
- MP3 Player Accountants
- Up-and-Coming Musicians- Put together two financial scenarios, the cost of producing a 4-track tape and the cost of producing an 8-track tape. Give that information to the "Musician Accountants" group.
- Musician Accountants- Put together three financial scenarios given the data from the Up-and Coming Musicians group:
- Saving the entire cost of an 8-track tape over 10 years with interest compounded at 5% (each cell in the column should have the previous cell's total multiplied by 1.05, then the entire column should have a total);
- Saving the difference in cost between an 8-track and 4-track tape over 10 years, with interest compounded at 5% (each cell in the column should have the previous cell's total multiplied by 1.05, then the entire column should have a total);
- Saving nothing.
- MP3 Consumers- Put together three financial scenarios; the cost of the most popular MP3 player, the cost of the cheapest MP3 player, and the cost of not buying an MP3 player (meaning, zero dollars spent). Give that information to the "MP3 Accountants" group.
- MP3 Accountants- Put together three financial scenarios:
- Saving the entire cost of the most popular MP3 player over 10 years with interest compounded at 5% (each cell in the column should have the previous cell's total multiplied by 1.05, then the entire column should have a total);
- Saving the difference in cost between the most popular MP3 player and the cheapest MP3 player over 10 years with interest compounded at 5% (each cell in the column should have the previous cell's total multiplied by 1.05, then the entire column should have a total);
- Saving nothing.
- Have a member of each group write their findings on the board, and present that information to the class.
- Discuss the financial opportunity costs of each scenario.
- Have students speak about which scenario appeals to them and why.
- End the class with a discussion of how a detailed financial analysis, including opportunity costs, is a crucial part of an economic analysis. However, students have to take into account other factors as well that may be more difficult to quantify. These include:
- The strong desire to have a career in music which means the willingness to make a financial sacrifice.
- The strong desire to have the most popular or technologically advanced MP3 player, despite the costs.
- Students can discuss how cost-benefit analyses play a part in their daily lives. For instance, the cost-benefit analysis of doing well in school: What are the costs and what are the benefits? Do the benefits outweigh the costs?
- Students can also talk about different kinds of opportunity costs they deal with on a daily basis. For instance, the opportunity costs of playing on a sports team: What opportunities are given up when a lot of time is dedicated to a sports team? How does a cost-benefit analysis help clarify the issues?