D2.Eco.4.6-8: How Competition Helps Set Prices and Wages
In plain English: D2.Eco.4.6-8 is the C3 Framework economics indicator for grades 6-8 that asks students to describe the role of competition in determining prices and wages in a market economy. Students learn that sellers competing for buyers tend to push prices down, and employers competing for workers tend to push wages up.
Describe the role of competition in the determination of prices and wages in a market economy.
C3 Framework for Social Studies (NCSS) · Dimension 2: Applying Disciplinary Concepts and Tools · Discipline: Economics · Exchange and Markets · Official standard
D2.Eco.4.6-8 asks students to describe the role of competition in setting prices and wages in a market economy, an economy where most prices and wages are set by buyers and sellers rather than by the government. Competition means rivalry: several sellers trying to win the same buyers, or several employers trying to hire the same workers. When sellers compete, each has a reason to lower its price or improve its product, or buyers go elsewhere. When employers compete, each has a reason to raise pay or improve working conditions, or workers go elsewhere. With little or no competition, those pressures weaken.
Students read a Federal Trade Commission brochure on how competition affects prices (Source 1), a Justice Department and FTC guide on competition among employers (Source 2), and an invented scenario about ice cream stands in two lake towns (Source 3). The activities include a market simulation, a card sort and a group poster.
Learning Objectives
By the end of this lesson, students will be able to:
Define competition, price, wage and market economy, and identify who competes with whom in a market
Describe how competition among sellers tends to lower prices and improve choices for buyers
Describe how competition among employers tends to raise wages and improve working conditions
Explain what happens to prices and wages when competition is missing or when competitors agree not to compete
Support a description with evidence from government sources and with calculations
Prior Knowledge Required
Students should already be comfortable with:
The roles of buyers and sellers in product, labor and financial markets D2.Eco.3.6-8
Explaining how economic decisions affect individuals and businesses D2.Eco.1.6-8
Multiplying and subtracting with decimals in money problems 6.NS.B.3
"Your town has only one movie theater. Then a second theater opens across the street. What do you predict will happen to ticket prices? What might happen to the pay of the teenagers who work at the snack counters? Why?"
List predictions in two columns, Prices and Pay. Most students predict cheaper tickets or better deals; fewer think about workers. Ask: "If the new theater needs 20 workers, where will it find them?" Tell students that D2.Eco.4.6-8 asks them to describe how competition helps decide both prices and wages, and that they will test their predictions with sources.
Direct Instruction15-20 minutes
Key terms for D2.Eco.4.6-8 (working definitions)
Term
Meaning
Example
Market economy
An economy where buyers and sellers, not the government, set most prices and wages
Stores choose their own prices
Competition
Rivalry among sellers for buyers, or among employers for workers
Two pizza shops on the same street
Price
What a buyer pays a seller for a good or service
$3.50 for a slice of pizza
Wage
What an employer pays a worker for each hour or day of work
$13 an hour to make pizzas
Monopoly
A market with only one seller of a product that has no close substitute
The only water company in a town
Price fixing
An agreement among competing sellers to set prices instead of competing (illegal in the United States)
Two shops agreeing to charge the same high price
Part 1: Sellers compete for buyers. A seller who charges more than its rivals for the same thing loses customers, so competition pushes prices toward what it costs to make and sell the good. Sellers also compete on quality, choice and service. When a seller has no rivals, buyers have nowhere else to go, so the seller can charge more.
Part 2: Employers compete for workers. Workers are sellers of labor, and employers are the buyers. When several employers need the same kind of worker, each must offer enough pay to attract and keep people, so competition pushes wages up. When a town has only one or two employers, workers have fewer choices. Show Diagram 1, which uses invented data from Source 3. Work these examples.
Two gas stations, one corner (invented)
Invented example: Station A charges $3.59 a gallon and Station B, across the street, charges $3.39 for the same gas. A driver needs 12 gallons. How much does the driver save at Station B, and what will Station A probably do?
Result: $3.59 - $3.39 = $0.20 a gallon; 12 x $0.20 = $2.40 saved. Most drivers can see both signs, so Station A will lose customers unless it lowers its price, which is why stations near each other often have similar prices.
Competing for cashiers (invented)
Invented example: a grocery store pays cashiers $13 an hour. A new warehouse nearby offers $16 an hour, and some cashiers apply there. The store raises its pay to $15 to keep its workers. How much more does a cashier who works 20 hours a week earn each week?
Result: $15 - $13 = $2 more an hour; 20 x $2 = $40 more a week. The store did not raise pay because a law required it: competition from another employer for the same workers pushed the wage up.
One seller or three (invented)
Invented example: at a town's summer concerts, only one vendor was allowed to sell bottled water, at $3.25 a bottle. This year the town lets three vendors in, and the price falls to $1.50. A family buys 4 bottles. How much does it save?
Result: $3.25 - $1.50 = $1.75 a bottle; 4 x $1.75 = $7.00 saved. With one seller, buyers had no other choice at the concert; with three, each vendor had to match the others or sell nothing.
Two hospitals or one (invented)
Invented example: in Town A, two hospitals compete to hire nurses and pay about $38 an hour. In Town B, about 60 miles away, one hospital is the only big employer of nurses and pays about $34. How much more does a nurse working 36 hours a week earn in Town A?
Result: $38 - $34 = $4 an hour; 36 x $4 = $144 more a week. With two employers competing, a nurse can switch jobs without moving, so each hospital must pay more to keep its staff. Other things, such as living costs, can also explain wage differences.
Teacher tip. Students often think competition only matters to shoppers. Ask "Who is competing for whom?" in every example: sellers for buyers, or employers for workers. Also point out that competition is a pressure, not a guarantee: prices and wages depend on costs, how many people want the good or the job, and other things too.
Guided Practice15 minutes
A government agency explains competition. Context note: the Federal Trade Commission (FTC) is a U.S. government agency that enforces laws meant to protect competition. It wrote this brochure for the public in 2007. Like any agency writing about its own work, it explains why it thinks competition matters. Read Source 1 aloud. Glossary: "incentive" (a reason to do something), "selection" (the range of choices), "hinder" (get in the way of), "principal basis" (main reason), "commodities" (goods that are the same no matter who sells them, like wheat), "virtually identical" (almost exactly the same), "drought" (a long dry spell), "uniformly" (in the same way everywhere), "antitrust concerns" (worries that a company is breaking the laws that protect competition).
1What if there were only one grocery store in your community? What if you could buy a camera from only one supplier? What if only one dealer in your area sold cars?
2Without competition, the grocer may have no incentive to lower prices. The camera shop may have no reason to offer a range of choices. The car dealer may have no motivation to offer a variety of car models and services.
3Competition in America is about price, selection, and service. It benefits consumers by keeping prices low and the quality and choice of goods and services high. Competition makes our economy work. [...]
[...]
4It’s illegal for businesses to act together in ways that can limit competition, lead to higher prices, or hinder other businesses from entering the market. [...] Agreements among businesses about price or price-related matters like credit terms are among the most serious business practices the FTC considers. That’s because price is usually the principal basis for competition and consumer choice. Price fixing – companies getting together to set prices – is illegal.
5But that does not mean that all price similarities, or price changes that occur about the same time, are always the result of price fixing. On the contrary, they often result from normal market conditions. For example, prices of commodities such as wheat are often identical because the products are virtually identical, and the prices that farmers charge all rise and fall together without any agreement among them. If a drought causes the supply of wheat to decline, the price to all affected farmers will increase. Uniformly high prices for a product in limited supply also can result from an increase in consumer demand: Just ask any shopper hunting for a “must have” children’s toy.
[...]
6A monopoly exists when one company controls a product or service in a market. If it’s because they offer consumers a better product at a better price, that’s not against the law. But a company that creates or maintains a monopoly by unreasonably excluding other companies, or by impairing other companies’ ability to compete against them, raises antitrust concerns.
Federal Trade Commission, Bureau of Competition, Competition Counts: How Consumers Win When Businesses Compete (Source 1: competition and prices) (2007). US government work (17 U.S.C. 105). Source text.
Imagine one seller. Prompt: paragraph 1 asks three "What if" questions. Pick one and predict what the only seller might do. Teacher note: accept answers about higher prices, fewer choices or worse service, and push students to give a reason: buyers have nowhere else to go.
What competition does. Prompt: in paragraph 3, what are the benefits of competition? Teacher note: it keeps "prices low and the quality and choice of goods and services high." Connect each benefit to a seller trying to win buyers.
Competing or cooperating? Prompt: why does paragraph 4 say that agreements among businesses about price are so serious? Teacher note: "price is usually the principal basis for competition and consumer choice," so when rivals agree on prices, buyers lose the main thing competition gives them.
Check the claim. Pairs write one sentence in their own words for paragraphs 4, 5 and 6, then compare with another pair. Keep the sentences for Activity 3.
Independent Practice15 minutes
Competition for workers. Context note: in 2016 the U.S. Department of Justice (DOJ) and the FTC wrote a guide for the people at companies who hire workers and set pay. In January 2025 it was replaced by newer guidelines, but its explanation of competition for workers is still a clear one. "Antitrust" laws are the laws that protect competition. Glossary: "vibrant" (lively, healthy), "actual and potential employees" (workers now and people who might be hired), "terms of employment" (the conditions of a job, such as hours and benefits), "retain" (keep), "unlawful" (against the law), "expressly or implicitly" (openly or in an unspoken way), "civil enforcement action" (a lawsuit by the government), "uniform bill rate schedule" (one set of pay rates everyone uses), "per diem" (paid by the day).
1Free and open markets are the foundation of a vibrant economy. Just as competition among sellers in an open marketplace gives consumers the benefits of lower prices, higher quality products and services, more choices, and greater innovation, competition among employers helps actual and potential employees through higher wages, better benefits, or other terms of employment. Consumers can also gain from competition among employers because a more competitive workforce may create more or better goods and services.
2From an antitrust perspective, firms that compete to hire or retain employees are competitors in the employment marketplace, regardless of whether the firms make the same products or compete to provide the same services. It is unlawful for competitors to expressly or implicitly agree not to compete with one another, even if they are motivated by a desire to reduce costs. [...]
[...]
3The DOJ filed a civil enforcement action against the Arizona Hospital & Healthcare Association for acting on behalf of most hospitals in Arizona to set a uniform bill rate schedule that the hospitals would pay for temporary and per diem nurses. [...]
U.S. Department of Justice, Antitrust Division, and Federal Trade Commission, Antitrust Guidance for Human Resource Professionals (Source 2: competition for workers) (2016). US government work (17 U.S.C. 105). Source text.
Students answer on their own: (1) In paragraph 1, what do employees gain when employers compete? (2) In your own words, why do the agencies say a fast-food restaurant and a grocery store can be competitors, even though they sell different things? (3) In paragraph 3, who were the buyers of labor, and why might a shared pay schedule hurt nurses? Collect the answers; Quiz questions 6-9 and 18 use Source 2.
Closure10 minutes
Two lake towns. Introduce Source 3, an invented scenario, for the quiz and the homework. Students read it on their own and mark every price with P and every wage with W.
1Invented scenario, written for this page. Maple Point and Harbor Town are two fictional towns on Pinecrest Lake. Every summer, visitors crowd their beaches, and many local teenagers take summer jobs.
2Maple Point. For years, Scoops was the only ice cream stand in Maple Point. Last summer a single cone cost $5.50, and Scoops paid its teen workers $11.00 an hour. Two of its workers quit in July to work at the marina, which paid $13.00.
3Harbor Town. Four ice cream stands line the Harbor Town boardwalk. A single cone costs between $4.00 and $4.50, depending on the stand. Each stand posts a "Now hiring" sign offering $13.00 to $14.00 an hour, and one also offers a free shirt and flexible hours.
4A new stand. This summer, Frosty Dock opened across the street from Scoops. It charges $4.75 a cone and offered new workers $12.50 an hour. Within two weeks, Scoops lowered its price to $4.75 and raised its pay to $12.50 so its workers would not leave. On a busy Saturday, Scoops now sells about 400 cones, down from about 520 on a Saturday last summer. Frosty Dock sells about 350.
5A suggestion. In August, the owner of Scoops told the owner of Frosty Dock, "Let's both go back to $5.25 a cone and both pay $12.00 an hour. We would both make more." Frosty Dock's owner said no.
SVHS (invented scenario written for this page), A Summer on Pinecrest Lake (Source 3: invented scenario). Original passage written for this page.
Exit ticket: In one sentence each, describe how competition affected (a) a price and (b) a wage in Source 3.
Teacher note on the sources: Sources 1 and 2 are US government works quoted exactly, with curly quotation marks and a dash as printed. They are written by the agencies that enforce competition laws, so they explain why their own work matters; students can ask what a business owner might add. Source 2 has been replaced by 2025 guidelines and is used for its explanation, not as current legal advice. Source 3 is invented. The lesson describes how competition works and takes no position on any current law or company.
Differentiation Strategies
For Struggling Students
Give a two-box organizer: Sellers compete for buyers (price) and Employers compete for workers (wage), with an arrow for up or down in each
Provide the frame "Because ___ compete for ___, the ___ went ___."
Read Sources 1 and 2 one paragraph at a time and restate each in one plain sentence before answering
For Advanced Students
Explain why prices in Harbor Town in Source 3 are not all exactly the same, even with four stands competing
Use Source 1, paragraph 5, to explain why two stores with the same price are not always fixing prices, and suggest what evidence would show the difference
Write a short dialogue between a worker and an employer in a town with only one employer, then rewrite it for a town with five
Assessment Guidance
What to Look For
Strong answers say who is competing with whom, describe the direction of the pressure (prices tend to fall when sellers compete; wages tend to rise when employers compete), explain what changes when competition is missing, and support each point with a quotation or a number. Watch for two confusions: thinking that competition only affects prices for shoppers and not wages for workers, and believing that competition guarantees a particular price or wage rather than pushing in a direction.
02
Classroom Activities
3 Activities
1
Lemonade Street Simulation
20 minWhole class, in two rounds
The class runs a pretend street of lemonade stands. Four students are stand owners, about four are job seekers, and everyone else is a customer with $5 in play money. Each round, owners set a price per cup and an hourly wage on cards and post them.
Rounds
Round 1, one stand: only one owner may sell. Customers buy or keep their money; job seekers accept the posted wage or stay home. Record the price, cups sold and wage.
Round 2, four stands: all four owners post prices and wages at the same time and may change them once after seeing the others. Customers buy where they like; job seekers choose an employer. Record the same numbers.
Debrief
How did the price change from round 1 to round 2? How did the wage change? Why?
Which owners changed their price or wage after seeing the others? What made them change?
What would have happened in round 2 if all four owners had secretly agreed on one high price?
Modification for a Shorter Class
Run round 2 only, and compare its results with the Maple Point numbers in Diagram 1.
2
Up or Down? Card Sort
15 minPairs
Pairs read 10 situation cards and predict whether competition will push a price or a wage up or down, then explain who is competing with whom.
The 10 Situation Cards (invented)
A second pharmacy opens in a small town.
Three new restaurants open and all need cooks.
The only bus company in a city buys its last rival.
Two phone companies start offering the same plan.
A big factory closes, leaving one employer in town.
Five tutoring services start advertising at one school.
Summer camps across a county compete for lifeguards.
Every gas station on a highway is bought by one owner.
Online stores begin selling the same sneakers as the mall.
Two hospitals agree not to hire each other's nurses.
Sample Answers for the Teacher
Prices tend to go down: cards 1, 4, 6 and 9 (more sellers competing for buyers).
Prices may go up: cards 3 and 8 (fewer rivals for buyers).
Wages tend to go up: cards 2 and 7 (more employers competing for workers).
Wages may go down or stop rising: cards 5 and 10 (fewer employers, or employers agreeing not to compete; card 10 is the kind of agreement Source 2 calls unlawful).
Discussion Questions
Which cards were about prices and which about wages? Did any card affect both?
Pick one card where you are unsure. What else would you want to know?
Modification for English Learners
Add an up or down arrow and a picture to each card, and post the frame "___ compete for ___, so the ___ goes ___."
3
Competition Poster
15 minGroups of 3-4
Each group makes a poster with two halves, "Sellers competing for buyers" and "Employers competing for workers." Each half needs one quotation from Source 1 or 2, one example from Source 3, and one example the group invents.
Poster Checklist
A title that names the market
Who competes with whom, shown with arrows
What happens to the price or the wage, and why
What would happen if the competition disappeared
Discussion Questions
Which group's invented example showed competition most clearly? Why?
Is competition always good for everyone? Who might lose when a new rival arrives?
Gallery Walk
Groups post their work. Each student leaves one sticky note on another poster with a question or an extra example.
03
Diagrams & Visual Aids
1 diagrams
Diagram 1: Competition Arrives in Maple Point (Invented Data from Source 3)
Invented data from Source 3. After a second stand opened, Scoops charged less for a cone and paid its workers more. The same event pushed a price down and a wage up.
04
Homework Assignment
~30 min
D2.Eco.4.6-8 Homework: Competition, Prices and Wages
Directions: Part 1 uses new invented situations. Part 2 uses Sources 1-3 in the lesson plan. Answer in complete sentences and show any arithmetic.
Part 1: Predicting with Competition (Problems 1-3)
For each situation, predict whether the price or wage will tend to rise or fall, and explain who is competing with whom: (a) a second grocery store opens in a town that had one; (b) four new hotels open near an airport and all need housekeepers; (c) the only two movie theaters in a city merge into one company.
Invented example: Bike Shop A charges $60 for a tune-up. Bike Shop B opens nearby and charges $45. Shop A lowers its price to $50. A family has 2 bikes to tune up. (a) How much does the family save at Shop A now compared with before? (b) How much would it save by going to Shop B instead of Shop A's old price? (c) Explain why Shop A changed its price.
Invented example: a restaurant pays dishwashers $14 an hour. A warehouse opens nearby paying $17, and the restaurant raises its pay to $16. (a) How much more does a dishwasher working 25 hours a week earn each week after the raise? (b) The restaurant still pays $1 less than the warehouse. Give two reasons some workers might stay at the restaurant anyway.
Part 2: Using the Sources (Problems 4-6)
Use Source 1, paragraph 6. In your own words, explain when a company with no competitors is breaking the law and when it is not. Give an invented example of each.
Use Source 3. (a) How much does Frosty Dock take in on a busy Saturday? (b) How much do the two Maple Point stands take in together on that Saturday? (c) Which stand takes in more, and by how much? Who gained from the new competition in Maple Point, and who lost?
Write a paragraph of 5-7 sentences: "How does competition among employers help decide wages?" Use one quotation from Source 2 and one detail from Source 3.
Rubric
Criterion
Full Credit (2 pts)
Partial Credit (1 pt)
No Credit (0 pts)
Who Competes
Names who competes with whom in every situation
Names some
Not named
Prices and Wages
Correct direction for prices and for wages, with reasons
Direction correct but reasons thin
Directions wrong or missing
Math and Evidence
Problems 2, 3 and 5 correct with work; quotations accurate
One slip or loose evidence
No work or evidence
Explanation
Problem 6 links competition to wages clearly with both sources
Uses one source
No explanation
05
Quiz: 20 Questions
Interactive, with answers
Instructions
Questions 1-5 use Source 1 (Federal Trade Commission) in Guided Practice. Questions 6-9 use Source 2 (Justice Department and FTC) in Independent Practice. Questions 10-14, 16 and 17 use Source 3, the invented scenario in Closure. Questions 15 and 19 use Sources 1 and 3, Question 18 uses Sources 2 and 3, and Question 20 uses all three. Your score updates as you answer, and Reset quiz clears everything.
Multiple choice: pick an option to check it. Short answer: write your answer, then reveal the model answer.
0 of 20 answered · 0 correct
Question 1 of 20 · Multiple Choice
According to Source 1, paragraph 2, what might the only grocer in a community have no incentive to do?
Answer: B
The brochure says, "Without competition, the grocer may have no incentive to lower prices." With no rival store, shoppers cannot go elsewhere, so cutting prices would not win new customers. Choice C mixes in the camera shop and the car dealer from the same paragraph. Choices A and D are not in the source.
Question 2 of 20 · Multiple Choice
Which practice does paragraph 4 of Source 1 call illegal?
Answer: D
Paragraph 4 defines price fixing as "companies getting together to set prices" and says it is illegal. Choice A is not illegal by itself: paragraph 5 explains that similar prices often come from normal market conditions. Choice B is what paragraph 6 says is not against the law. Choice C is the wheat example, where prices rise because supply falls, with no agreement.
Question 3 of 20 · Multiple Choice
In paragraph 5, why are the prices of commodities such as wheat often identical without any agreement among farmers?
Answer: A
The brochure says wheat prices are often identical "because the products are virtually identical," so no buyer would pay one farmer more than another for the same wheat. Choice B is not in the source. Choice C would describe one seller, not many farmers. Choice D twists the idea: buyers compare prices, but the reason given is that the products are the same.
Question 4 of 20 · Multiple Choice
According to paragraph 5, what happens to the price of wheat when a drought causes the supply to decline?
Answer: C
The brochure says, "If a drought causes the supply of wheat to decline, the price to all affected farmers will increase." Prices can rise together for a market reason, not because of an agreement. Choice A reverses the direction. Choice B contradicts the paragraph's point that this is not price fixing. Choice D adds a limit the source does not give.
Question 5 of 20 · Multiple Choice
According to paragraph 6, when is a monopoly not against the law?
Answer: B
The brochure says, "If it's because they offer consumers a better product at a better price, that's not against the law." Choice C is the opposite: excluding other companies "raises antitrust concerns." Choices A and D are not reasons the source gives.
Question 6 of 20 · Multiple Choice
According to Source 2, paragraph 1, how can consumers gain from competition among employers?
Answer: A
The guide says, "Consumers can also gain from competition among employers because a more competitive workforce may create more or better goods and services." Choice B invents a law. Choice C is not in the source. Choice D contradicts the paragraph, which praises competition among sellers too.
Question 7 of 20 · Multiple Choice
Paragraph 2 says it is unlawful for competitors to agree not to compete "even if they are motivated by a desire to" do what?
Answer: D
The full sentence ends "even if they are motivated by a desire to reduce costs." Paying workers less would cut a company's costs, but agreeing with rivals to do it is still against the law. Choice B confuses this with the earlier point that firms are competitors "regardless of whether the firms make the same products." Choices A and C are not in the source.
Question 8 of 20 · Multiple Choice
In paragraph 3, what did the Arizona Hospital & Healthcare Association do?
Answer: C
It acted for most hospitals in the state "to set a uniform bill rate schedule that the hospitals would pay for temporary and per diem nurses." When the buyers of labor agree on one rate, they stop competing for nurses, which can hold pay down. Choice D is the opposite of the concern. Choices A and B are not in the source.
Question 9 of 20 · Multiple Choice
Paragraph 2 of Source 2 says firms that compete to hire workers are competitors "regardless of whether the firms make the same products." Which pair of businesses fits that idea best?
Answer: B
A bank and a hospital sell very different services, but if both need office clerks they compete to hire the same workers, so they are competitors in the employment marketplace. Choice A is an agreement on product prices, not competition to hire. Choice C shows rivals for the same buyers, not firms that make different products. Choice D is a seller and its buyer, not two employers competing for workers.
Question 10 of 20 · Multiple Choice
Use Source 3. A family of four buys one cone each at Scoops. How much less do they pay this summer than last summer?
Answer: D
Each cone costs $5.50 - $4.75 = $0.75 less, and 4 x $0.75 = $3.00. Choice A is the saving on one cone. Choice B is what the four cones cost this summer (4 x $4.75). Choice C counts only two cones.
Question 11 of 20 · Multiple Choice
In Source 3, why did Scoops raise its pay to $12.50 an hour?
Answer: B
The scenario says Scoops raised its pay "so its workers would not leave." Frosty Dock was now a second employer offering $12.50, so Scoops had to compete for workers. Choice A invents a law. Choice C is false: Scoops sells fewer cones on a Saturday than last summer. Choice D describes the price cut, not the pay raise.
Question 12 of 20 · Multiple Choice
Use Source 3. By how much did Scoops' sales of cones on a busy Saturday fall, in dollars, from last summer to this summer?
Answer: C
Last summer: 520 x $5.50 = $2,860. This summer: 400 x $4.75 = $1,900. The drop is $2,860 - $1,900 = $960. Choice A is the drop in the number of cones (520 - 400), not dollars. Choice B multiplies that drop by $4.75. Choice D is this summer's sales, not the change.
Question 13 of 20 · Multiple Choice
Use Source 3. How many cones do the two Maple Point stands sell together on a busy Saturday this summer, compared with Scoops alone last summer?
Answer: A
This summer: 400 + 350 = 750 cones. Last summer: 520. The difference is 750 - 520 = 230 more. Lower prices brought more buyers. Choice B compares Scoops alone this summer with last summer. Choice C counts only Frosty Dock's sales. Choice D ignores the new stand.
Question 14 of 20 · Multiple Choice
If both stands had accepted the suggestion in Source 3, how much more would a family of four pay for four cones than they pay now?
Answer: D
$5.25 - $4.75 = $0.50 more a cone, and 4 x $0.50 = $2.00. Choice A is the extra cost of one cone. Choice B counts only two cones. Choice C is the full cost of four cones at $5.25.
Question 15 of 20 · Short Answer
Before Frosty Dock opened, Scoops was the only ice cream stand in Maple Point. Use paragraph 2 of Source 1 to explain why Scoops could charge $5.50 while Harbor Town's stands charged $4.00 to $4.50.
Model answer: Source 1 says that without competition a seller "may have no incentive to lower prices." Scoops had no rival in Maple Point, so visitors who wanted ice cream there had to pay its price. In Harbor Town, four stands competed for the same buyers, so a stand that charged much more than the others would lose customers. Rubric: 1 point for using the paragraph; 1 point for contrasting one seller with four.
Question 16 of 20 · Short Answer
Compare the wages offered in Harbor Town with what Scoops paid last summer in Maple Point. Describe how competition, or the lack of it, helps explain the difference.
Model answer: Harbor Town's stands offered $13.00 to $14.00 an hour, and one added a free shirt and flexible hours, while Scoops paid $11.00. In Harbor Town four stands competed for the same teen workers, so each had to offer more to hire and keep them. In Maple Point, Scoops had no rival stand, though the marina's $13.00 pay still drew two workers away. Rubric: 1 point for the comparison with numbers; 1 point for the explanation using competition among employers.
Question 17 of 20 · Short Answer
Use Source 3. A Scoops worker works 15 hours a week. How much more does she earn each week at the new wage than at last summer's wage? How much more is that over a 10-week summer? Show your work.
Model answer: $12.50 - $11.00 = $1.50 more an hour. 15 x $1.50 = $22.50 more a week, and 10 x $22.50 = $225.00 more over the summer. Rubric: 1 point for $22.50; 1 point for $225.00 with work shown.
Question 18 of 20 · Short Answer
Use paragraph 1 of Source 2 to explain how Frosty Dock's opening helped workers in Maple Point, including workers who never worked at Frosty Dock.
Model answer: Source 2 says "competition among employers helps actual and potential employees through higher wages." When Frosty Dock opened and offered $12.50, Scoops had to match it, so Scoops' own workers got a raise from $11.00 without changing jobs. Teens looking for work also had two employers to choose from instead of one. Rubric: 1 point for the quotation or a close paraphrase; 1 point for applying it to Scoops' workers.
Question 19 of 20 · Short Answer
Harbor Town's four stands all charge between $4.00 and $4.50 a cone. Does that prove they are fixing prices? Use paragraph 5 of Source 1 in your answer.
Model answer: No. Paragraph 5 says similar prices "often result from normal market conditions" and are not always the result of price fixing. Four stands selling nearly the same cones on the same boardwalk would charge similar prices because a stand that charged much more would lose buyers. Price fixing would need an agreement among the owners, and the scenario gives no evidence of one. Rubric: 1 point for the answer with the paragraph; 1 point for the reasoning about competition and evidence.
Question 20 of 20 · Short Answer
The owner of Scoops suggested that both stands charge $5.25 and pay $12.00 an hour. Using Sources 1 and 2, explain why this suggestion is a problem and how it would have affected both buyers and workers.
Model answer: The suggestion is an agreement among competitors to set prices and wages, which Source 1 calls price fixing and Source 2 calls unlawful for employers "even if they are motivated by a desire to reduce costs." Buyers would pay $0.50 more a cone because the stands would stop competing on price. Workers would earn $0.50 less an hour because the two employers would stop competing for them. Rubric: 1 point for naming the problem with one source; 1 point for the effect on buyers; 1 point for the effect on workers.
0 of 20 answered · 0 correct
06
Frequently Asked Questions
10 Questions
What does D2.Eco.4.6-8 mean?
D2.Eco.4.6-8 asks middle school students to describe how competition helps determine prices and wages in a market economy. The full text is "Describe the role of competition in the determination of prices and wages in a market economy." It is part of the Exchange and Markets section of the C3 Framework's economics standards for grades 6-8.
Does competition always make prices go down?
No. Competition pushes prices toward what it costs to make and sell a good, but many other things also affect prices. Students should describe competition as a pressure in one direction, not a guarantee of a lower price.
How does competition affect wages?
When several employers want the same kind of worker, each must offer enough pay and good enough conditions to attract and keep people, so wages tend to rise. When there are few employers, workers have fewer places to go. Wages also depend on skills, on how many people want the job and on the cost of living.
Who are the buyers and sellers when we talk about wages?
Workers are the sellers of labor and employers are the buyers. That is why competition among employers is the kind that pushes wages up. This builds directly on D2.Eco.3.6-8, which asks students to explain the roles of buyers and sellers in product, labor and financial markets.
Why does this lesson use government sources?
The Federal Trade Commission and the Justice Department enforce the federal laws that protect competition, and they have written plain explanations for the public. Because they are describing their own work, students can also practice asking what point of view a source comes from.
Is the ice cream scenario real?
No. The two lake towns, the stands and every number in Source 3 and Diagram 1 are invented for this page so that students can calculate and compare. Sources 1 and 2 are real government publications, quoted word for word.
In which grade is D2.Eco.4.6-8 taught?
It depends on the school. The C3 Framework sets indicators for the end of grade 8, not for one grade, so this one may appear in a grade 6, 7 or 8 social studies course or in a short economics unit. It fits well right after a lesson on buyers and sellers (D2.Eco.3.6-8) and before supply and demand (D2.Eco.6.6-8).
How is D2.Eco.4.6-8 different from D2.Eco.4.9-12?
The grades 6-8 indicator asks students to describe the role of competition in setting prices and wages. The grades 9-12 indicator asks them to evaluate how much competition among sellers and among buyers actually exists in specific markets. Middle school builds the idea; high school measures and judges it.
How can I keep a lesson on competition neutral?
Describe how competition works with invented cases and official sources, and let students judge. The lesson takes no position on any current company or law. Discussion questions ask who gains and who loses when a new rival arrives, so students see that a new competitor can help buyers and workers while hurting an existing business.
What is a good quick check for D2.Eco.4.6-8?
Give students a new situation, such as "a second gym opens in town," and ask who is competing with whom, which way the price or wage will tend to move and why. If students can do this for both a price and a wage, they are meeting the indicator.
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Related Standards
5 standards
These standards connect to D2.Eco.4.6-8: prerequisites to review first, parallel standards at the same level, and next steps that build on it.
Before this lesson
D2.Eco.3.6-8Prerequisite
Explain the roles of buyers and sellers in product, labor and financial markets
Standard text: National Council for the Social Studies (NCSS), The College, Career, and Civic Life (C3) Framework for Social Studies State Standards: Guidance for Enhancing the Rigor of K-12 Civics, Economics, Geography, and History (Silver Spring, MD: NCSS, 2013). NCSS was not involved in the production of this lesson and does not endorse it.
