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The PNC Bank “Christmas Price Index”

Learning Goals/Objectives:

• Define and use the
PNC Christmas Price Index and the Consumer Price Index.

• Distinguish between
the index price and true price.

• Analyze trends on
the PNC Christmas Price Index and the Consumer Price Index.

Overview:

Each year, PNC Bank publishes the “Christmas Price Index” as
an entertaining, simple way to introduce basic economic concepts. The change in
the prices of Christmas gifts, year over year, provides an excellent lesson on
inflation and other economic trends. Plus, similarities to the U.S. Consumer
Price Index make it a fun and easy way to study economic indicators –
specifically, changes in the price level.

This lesson uses the online version of the PNC Bank
“Christmas Price Index.

Activity Link: http://www.pncchristmaspriceindex.com/CPI/educators.html

Note: PNC releases its Christmas Price Index annually
on the Monday after Thanksgiving. For the most up to date (annual) information,
visit http://www.pncchristmaspriceindex.com

For more information about PNC Bank, go to: https://www.pnc.com

Grouping of Students:

Class discussion

Methods:

Analysis

Mathematics applications

Activities:

Go to the online lesson on the PNC Bank web page. http://www.pncchristmaspriceindex.com/CPI/downloads/StockMarketGame-09.pdf

This web page includes additional video
and print resources. A new version of
the Christmas Price Index is published by PNC Bank each December. The lesson will be edited to refer to the new
price data.

Materials:

Fact Sheet 1: The Twelve Days of Christmas

Fact Sheet 2: Recession Gives True Love Something to be
Happy About

Fact Sheet 3: PNC CPI Table

Activity Sheet 1: Consumer Price Index

Activity Sheet 2: Comparing Two Years

Activity Sheet 3: Comparing Two Indexes

Activity Sheet 4: Figuring Out Your Gift List

Supply and Demand for Concert Tickets

Learning Goals/Objectives:

Students will:

∙ Identify the factors that influence the supply and demand for a product.

∙ Identify possible market and public policy options in the concert ticket situation.

∙ Propose a policy option in the given concert ticket situation.

∙ Evaluate their policy option with regard to the criteria of efficiency and fairness.

Overview:

In October, 2007, the Federal Reserve Bank of Richmond published a “Weekly Update” article about the high prices being demanded and paid for tickets to concerts by Miley Cyrus (aka Hannah Montana). Kids and parents have complained about the unfairness of a market where ticket resellers can buy tickets at retail prices and sell them for large profits in secondary markets. The article offers a fairly simple economic analysis and some serious - and some not so serious - options for policy makers who are concerned about the fairness of markets and the concerned consumers.

Students read an article about the market for “Hannah Montana” concert tickets in the Fall of 2007. They identify the factors that influence the supply and demand for concert tickets, and discuss the fairness and efficiency of several possible public policies regulating concert ticket sales. In the end they discuss whether or not in this case “fairness” or “equity” is an issue that demands intervention in the market. This focuses attention on the potential roles (public policies) of government in the market economy.

Activities:

1. Introduce the article by asking students if they have ever paid more for a concert ticket or another product than the “face value” or normal box-office price. Ask why they were willing to pay a price higher than the original asking price. Note the various responses and examples.

Generalize about the factors that influence demand and supply for products like concert tickets.

Factors Influencing Demand Factors Influencing Supply

Tastes and preferences (utility) Production input costs

Income level Expectation of profit

Prices of Substitute Products Producers’ opportunity cost

Prices of complementary products Technology improvements

Consumers’ future expectations Producers’ future expectations

You can use Visual 1: Factors Influencing Supply and Demand, to illustrate the general factors influencing demand and supply.

2. Distribute copies of the Student Page 1: Reading, “Hannah Montana tickets for $250? It's an outrage to fans and parents — but not to economists.” Students should read the article, noting the factors mentioned that they think influence supply and demand.

After the reading, ask students to give examples from the article that illustrate the factors influencing demand.

Possible answers: tastes and preferences (popularity of Hannah Montana), income (many people’s willingness to pay high prices), substitutes (other locations), expectations (increasing prices).

Ask students to give examples from the article that illustrate the factors influencing supply. Note: These may be a little more difficult to identify.

Possible answers: Number of sellers, costs of production (most likely reflected by the initial box-office prices),profit and future expectations (speculation by ticket resellers), opportunity cost (reluctance to charge higher initial box-office prices, or the limited number of concerts Hannah Montana can do vs. other time opportunities or obligations), technology (used by resellers to purchase more tickets).

3. Explain: In this situation, the quantity demanded at the box-office price was apparently greater than the quantity supplied. Ticket re-sellers purchased tickets and offered them for sale at higher prices through a secondary market. Many consumers offered to purchase the tickets at higher prices. As tickets were resold, the market found an equilibrium price, when prices rose to a price where the quantity supplied equaled the quantity demanded.

Equilibrium is the point at which the supply and demand curves cross; at this point, the quantity demanded and the quantity supplied are equal. The price indicated at that point is the price we see in the market, and the quantity illustrates the amount produced.

The demand for Hannah Montana tickets was apparently high, relative to the box-office price. If demand increases (shifts to the right), the equilibrium point changes, as prices rise. Normally, a higher price is an incentive for producers to increase output, but, in this case, the quantity supplied could not be increased.

Since the supply of tickets was fixed (in the short term), the market experienced a shortage, resulting in higher ticket prices.

4. Ask: What is the primary issue illustrated in the article?

Possible Answers: Answers may very, but the primary question raised in the article is whether or not the government (at some level) should regulate the market so that more people have access to concert tickets or access to the tickets at lower prices (the original box-office price).

5. Ask: What are the potential options for markets, consumers, producers or public policy offered by the author? Brainstorm and create a list the student responses. List all responses, no matter how strange or impractical.

Possible Answers:

• Free market – no restrictions on sales, purchases or re-selling.

• The concert promoters can set higher initial box-office prices.

• Anti-re-selling (scalping) laws (strictly enforced): maximum prices or purchase limits

• Box-office sales only (rationing by queues).

• Auction tickets to the highest bidders.

• Ticket purchasers must pass a test (tickets go to those with the greatest utility).

• Ban the use of technologies that benefit re-sellers.

6. Ask: What are the criteria we can use to determine the best policy option? Brainstorm and create a list the student responses. List all responses.

Possible Answers:

• Is it “fair” to consumers? Does everyone have the opportunity to get tickets?

• Is it “fair” to the producers?

• Do the producers maximize profits? (Remember, the re-sellers are also producers.)

• Do those who want tickets (greatest utility) and are willing to pay more, get them?

• Are negative or positive externalities created as a result of the system?

• Does the system result in the higher or lower prices? Does it matter?

• Does the system effectively allocate the tickets?

You can use Visual 2: Economic Goals to illustrate and focus the discussion on some of the general goals of economic systems and public policies.

7. Assign the students to groups of three or four for this part of the activity.

Ask each group to write a response to following prompt. Allow time for the groups to write a proposal and rationale.

In the situation identified in the article about Hannah Montana concert tickets, what is one possible government policy option? How might that policy impact consumers and producers. Provide a rationale for your proposal with analysis based on at least three of the criteria identified by the class.

8. Ask the groups to briefly present their proposals, impacts and rationales. After all proposals have been presented, students should ask questions about the other groups’ proposals. The point is not to criticize, but to ask questions that clarify the proposals, impacts and rationales.

After the presentations and questions, students can vote on the “best” policy. If possible, narrow the options to two possible options prior to the vote. This can be by consensus about the two most reasonable or most popular options.

Materials:

Original Article Link: Campbell, Doug. “Hannah Montana tickets for $250? It's an outrage to fans and parents — but not to economists,” Region Focus: Weekly Update, Federal Reserve Bank of Richmond, October 24, 2007.

URL:http://www.richmondfed.org/publications/economic_research/region_focus/weekly_update/archive/2007/20071024.cfm

Article reprint and other handouts available in download of this lesson

Assessment:

Ask students to review the problem, the policy options, the criteria and the rationales for the options. If possible, compare the Hannah Montana situation to current national, state or local issues facing voters. (upcoming election issues, news stories or local/national controversies.)

Student can write a brief analysis of a local, state or national issue using the evaluation criteria identified by the class. You can assign a specific issue or students can select one. Use Student Page 3: Assessment.

Choose a current controversy or political issue (local, state, national or global). In your opinion, what is one possible government policy option? How might this policy impact consumers and producers. Provide a rationale for your proposal with analysis based on at least three of these criteria:

• Efficiency

• Equity

• Freedom

• Competition

• Property Rights

• Externalities

• Growth

Download:

Lesson 28 Supply and Demand for Concert Tickets.doc

Decision-Making about Your Financial Goals

Learning Goals/Objectives:

Objectives:

• Identify the benefit of using cost-benefit analysis.

• Identify the costs of achieving a goal.

• Identify the benefits of achieving a goal.

Overview:

Procedures:

1. Begin the discussion by identifying a specific personal financial goal or restating the goal identified in Lesson 1. (eg., save for a major purchase, protecting identity, home purchase,)

Each student should be able to articulate at east one possible long-term goal and what actions they might take to achieving the goal. Other students can suggest ways to clarify the goal.

Use Handout 2, from Lesson 1, to identify the goal.

2. Discuss the costs associated with a financial decision (achieving a goal).

• Explicit costs: money

• Transaction costs: money, time or trouble

• Opportunity cost: The value of the next best alternative.

Costs can be just about anything the students identify as a negative – money, time, conflicts with other goals, etc.

Using Handout 2 to write a description of the costs of achieving the goal.

3. Discuss the benefits of achieving a goal (refer to the previous discussion.)

• Income

• Status or “psychic income”

• Future opportunities

• Leisure or lifestyle benefits

• Other?________________________

Ask: How are you better off after achieving your goal?

Use handout 3 to write a description of the benefits of achieving the goal.

4. Explain that a choice almost always involves comparing the benefits and costs of alternatives. Students should compare the costs and benefits of achieving the goal. If the costs are greater than the benefits, is the goal realistic? Refer to the SMART goals description (Handout 1, Lesson 1).

5. Given a situation, ask the students to identify the benefits and costs of achieving the goal. Pick any goal the students may all be able to identify with – a home, education, new job, etc.

An option is for small groups to identify either costs or benefits, then share their ideas. Other groups can ask questions to clarify the groups’ ideas.

6. Students can further discuss their personal choices, based on the costs and benefits identified.

Activities:

Handout 1 (Handout 2, Lesson 1)

Achieving My Financial Goal

My financial goal is…____________________________________________________

_____________________________________________________________________

The benefits of achieving my goal are... _____________________________________

_____________________________________________________________________

The costs of achieving my goal are…_______________________________________

_____________________________________________________________________

The obstacles I may face are…____________________________________________

_____________________________________________________________________

I can overcome the obstacles by… _________________________________________

_____________________________________________________________________

If I achieve my goal, I can… ______________________________________________

_____________________________________________________________________

Assessment:

Assessment:

• Students articulate the types of costs of a decision. Clarify misunderstandings.

• Students articulate the potential benefits of a personal financial decision.

• Given a choice situation, students summarize how costs and benefits influence

their choice.

Download:

Lesson 2 Decision-Making About Your Financial Goals.doc

Identifying Your Financial Goals

Learning Goals/Objectives:

Overview

The first step in creating a financial plan or financial problem solving is to articulate and clarify your financial goals. Your goal is what you want to achieve – to purchase something, avoid or reduce debt, save, etc. This lesson helps students clarify their financial goals through a writing exercise and application of the SMART goal setting method.

Objectives

• Identify and clarify short-term and long-term financial goals.

• Identify the characteristics of a clearly written “SMART” goal.

Overview:

Procedures:

1. Generate a discussion of personal financial goals. Ask: What are your financial goals. Generalize about different types of goals and incentives to achieve goals.

• Short-term goals – today, tomorrow or in a few months – purchase something)

• Medium-term (several months to 1-2 years – a major purchase, school)

• Long-term (more than a year to several years – purchase a home, retirement)

• Personal – family – professional - social goals.

• Internal incentives (goals) vs. external incentives (goals).

(You have a personal goal, vs. something externally motivated.

2. Ask: What is the difference between short-term and long-term?

Explain that there is no right answer or technically correct answer, but that short term goals are those you face every day and that, typically, must be dealt with in order to achieve future or longer-term goals.

Ask: What is the relationship between short-term and long-term goals? Typically, you must achieve short term-goals (or give them up) to achieve long-term goals. For instance, to purchase a home, you may have to save – not spend on things you want.

2. Introduce characteristics of a “good” or well-written financial goal.

See the details about SMART goals. See Handout 1 for an explanation of SMART goals.

S = Specific

M = Measurable

A = Attainable

R = Realistic

T = Timely

3. Ask students to write a financial goal in a complete sentence.

Each student should read their goal to the class. Do not allow questions. Simply identify the variety of goals.

4. Ask each student to rewrite their goal 3 more times using different language or from a different perspective. Keep the same idea, but describe it in different ways.

5. Ask one volunteer to read their initial goals. Then read the 3 other descriptions of the goal. Ask the student: which of the 4 versions is the best way to accurately describe their goal?

6. Clarify the meanings of the different versions of the written goal. Typically, the revisions get more to the real goal. In many cases, the original description simply describes the result of the problem, not the actual problem.

7. Use Handout 2 for students to begin the description of a SMART goal. With their goal from the previous steps in mind, complete the sections beginning with the letters S, M, A, R, and T. Then ask the students to re-identify their goal by writing what they will be able to do if they achieve the goal.

NOTE: Students will use Handout 2 to complete the next 2 lessons, “Decision-Making about Your Financial Goal” and “Overcoming Obstacles to Achieving Financial Goals.”

Activities:

Handout 1

SMART Goals

SMART financial goals are…

Specific

Goals should be straightforward and emphasize what you want to happen. Specifics help us to focus our efforts and clearly define what we are going to do.

Specific is the What, Why, and How of the SMART model.

WHAT are you going to do? Use action words such as direct, organize, coordinate, lead, develop, plan, build etc.

WHY is this important to do at this time? What do you want to ultimately accomplish?

HOW are you going to do it?

Ensure the goals you set are very specific, clear and easy. Instead of setting a goal to lose weight or be healthier, set a specific goal to lose 2cm off your waistline or to walk 5 miles at an aerobically challenging pace.

Measurable

If you can't measure it, you can't manage it. In the broadest sense, the whole goal statement is a measure for the project; if the goal is accomplished, the project is a success. However, there are usually several short-term or small measurements that can be built into the goal.

Choose a goal with measurable progress, so you can see the change occur. How will you see when you reach your goal? Be specific! "I want to read 3 chapter books of 100 pages on my own before my birthday" shows the specific target to be measure. "I want to be a good reader" is not as measurable.

Establish concrete criteria for measuring progress toward the attainment of each goal you set. When you measure your progress, you stay on track, reach your target dates, and experience the exhilaration of achievement that spurs you on to continued effort required to reach your goals.

Attainable

When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You develop that attitudes, abilities, skills, and financial capacity to reach them. Your begin seeing previously overlooked opportunities to bring yourself closer to the achievement of your goals.

Goals you set which are too far out of your reach, you probably won't commit to doing. Although you may start with the best of intentions, the knowledge that it's too much for you means your subconscious will keep reminding you of this fact and will stop you from even giving it your best.

A goal needs to stretch you slightly so you feel you can do it and it will need a real commitment from you. For instance, if you aim to lose 20lbs in one week, we all know that isn't achievable. But setting a goal to loose 1lb and when you've achieved that, aiming to lose a further 1lb, will keep it achievable for you.

The feeling of success which this brings helps you to remain motivated.

Realistic

This is not a synonym for "easy." Realistic, in this case, means "do-able." It means that the learning curve is not a vertical slope; that the skills needed to do the work are available; that the project fits with the overall strategy and goals of the organization. A realistic project may push the skills and knowledge of the people working on it but it shouldn't break them.

Devise a plan or a way of getting there which makes the goal realistic. The goal needs to be realistic for you and where you are at the moment. A goal of never again eating sweets, cakes, crisps and chocolate may not be realistic for someone who really enjoys these foods.

For instance, it may be more realistic to set a goal of eating a piece of fruit each day instead of one sweet item. You can then choose to work towards reducing the amount of sweet products gradually as and when this feels realistic for you.

Be sure to set goals that you can attain with some effort! Too difficult and you set the stage for failure, but too low sends the message that you aren't very capable. Set the bar high enough for a satisfying achievement!

Timely

Set a timeframe for the goal: for next week, in three months, by fifth grade. Putting an end point on your goal gives you a clear target to work towards.

If you don't set a time, the commitment is too vague. It tends not to happen because you feel you can start at any time. Without a time limit, there's no urgency to start taking action now.

Time must be measurable, attainable and realistic.