Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Economics
Lesson Topic: distinction between social optimum and market equilibrium
Learning Objective/s:
  • Describe the difference between private and social costs and benefits.
  • Explain how externalities cause market equilibrium to diverge from the social optimum.
  • Calculate market‑ and socially‑optimal quantities using marginal cost/benefit equations.
  • Evaluate the welfare impact of externalities and justify appropriate policy responses.
  • Apply Pigouvian taxes or subsidies to correct market failures.
Materials Needed:
  • Projector and screen for diagram slides
  • Whiteboard and markers
  • Handout with MPC, MPB, MSC, MSB diagrams and numerical example
  • Calculator or spreadsheet
  • Worksheets for practice problems
 Introduction:
Begin with a quick poll asking students to identify real‑world examples of costs that affect others. Link these to prior knowledge of private costs and highlight the gap that leads to market failure. State that by the end of the lesson they will be able to distinguish market equilibrium from the socially optimal outcome and propose policy fixes.
Lesson Structure:
  1. Do‑now (5’) – Mini‑quiz on private vs. social costs/benefits.
  2. Teacher input (10’) – Define private/social costs & benefits; present MPC, MPB, MSC, MSB equations and diagram.
  3. Guided practice (12’) – Work through the numerical example to find Qm and Qs in pairs.
  4. Class discussion (8’) – Compare outcomes, identify dead‑weight loss, and discuss welfare implications.
  5. Policy activity (10’) – Groups design a Pigouvian tax or subsidy for the example and predict the new equilibrium.
  6. Check for understanding (5’) – Exit ticket: one reason markets fail and one policy tool to correct it.
Conclusion:
Summarise how externalities shift the gap between private and social outcomes and how appropriate taxes or subsidies can restore efficiency. Collect exit tickets to gauge understanding, and assign a short homework task to analyse a real‑world externality using the same framework.