Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Economics
Lesson Topic: distinction between private, external and social costs and benefits
Learning Objective/s:
  • Describe private, external, and social costs and benefits.
  • Explain how externalities cause divergence between private and socially optimal outcomes.
  • Apply the formulas Social Cost = Private Cost + External Cost (and similarly for benefits) to simple numerical examples.
  • Analyze policy tools (taxes, subsidies, regulation, tradable permits) for correcting externalities.
  • Evaluate graphically the impact of externalities on supply‑and‑demand curves.
Materials Needed:
  • Projector and screen
  • Whiteboard and markers
  • Printed handout with summary table and graph
  • Calculator worksheets for cost calculations
  • Sticky notes for group activity
  • Laptop with presentation slides
 Introduction:
Begin with a quick poll: who can think of a product that affects people beyond the buyer? Connect this to prior learning about market equilibrium and introduce today’s focus on private, external, and social costs and benefits. Explain that by the end of the lesson students will be able to identify each type, calculate social cost, and suggest appropriate policy responses.
Lesson Structure:
  1. Do‑Now (5') – Students list everyday examples of costs/benefits; share briefly. (Engage prior knowledge)
  2. Mini‑lecture (10') – Define private, external, social costs/benefits; present formulas and summary table. (Direct instruction)
  3. Guided practice (10') – Work through the 100‑unit example; calculate MSC and discuss optimal output. (Application)
  4. Graph activity (10') – In pairs, draw supply‑demand diagram showing MPC, MSC (or MPB, MSB) and identify market vs socially optimal quantity. (Visual learning)
  5. Policy stations (15') – Four stations each illustrating a policy tool; groups rotate, note how each internalises externalities. (Collaborative inquiry)
  6. Check for understanding (5') – Exit ticket: write one sentence defining each cost/benefit type and name a suitable policy for a negative externality. (Formative assessment)
Conclusion:
Summarise that distinguishing private, external, and social impacts reveals why markets can fail and how policy can bridge the gap. Collect exit tickets to gauge understanding, and assign a short homework: find a real‑world externality, calculate its social cost, and propose a corrective policy.