Lesson Plan

• Define transfer earnings and distinguish them from economic rent.
• Calculate transfer earnings for a worker using opportunity‑cost reasoning.
• Explain how transfer earnings set a wage floor and its relevance to minimum‑wage policy.
• Analyse the impact of government taxation on economic rent without altering labour supply.
• Apply the concepts to a real‑world example (e.g., skilled carpenter).

• Whiteboard or interactive whiteboard
• Projector and slide deck with definitions and example
• Handout worksheet with calculation tasks
• Calculator for each student
• Graph paper or digital drawing tool for supply‑demand diagram
• Markers / pens

Begin with a quick poll: “If you could earn $20,000 in a job you dislike or $15,000 doing something you enjoy, which would you choose?” This taps prior knowledge of opportunity cost and frames today’s focus on transfer earnings. Explain that today’s success criteria are to define transfer earnings, compute it for a given worker, and link it to wage‑floor policy.

1. Do‑now (5’): Students answer the poll on sticky notes; teacher collects responses to highlight opportunity cost. (Check understanding)
2. Mini‑lecture (10’): Present definitions of transfer earnings and economic rent with slides; introduce the formula. (Note‑taking)
3. Guided example (12’): Walk through the carpenter example; students calculate opportunity cost and transfer earnings on the worksheet. (Formative feedback)
4. Group activity (10’): Small groups calculate transfer earnings for a new scenario and determine economic rent; groups share answers. (Peer discussion)
5. Diagram demonstration (8’): Show a labour‑supply/demand graph illustrating the TE floor and a minimum wage above it; students sketch the diagram on graph paper. (Visual learning)
6. Quick quiz (5’): Exit ticket: define transfer earnings and state one policy implication. (Summative check)

Summarise that transfer earnings represent the minimum wage a worker needs based on alternative uses of time, and any earnings above this constitute economic rent. Remind students that taxing economic rent can raise revenue with little labour‑supply distortion. For homework, ask them to locate a recent news article on minimum‑wage changes and identify the implied transfer earnings.