Lesson 4: Pricing Decisions for Entrepreneurs

In this lesson, students will focus on how supply, demand, and the market affect pricing decisions for entrepreneurs. 

Economics

Prices are determined by the interaction between buyers and sellers in a market. Therefore, it is essential for entrepreneurs to understand how prices are set and how supply and demand influence their pricing decisions. Since markets are dynamic, recognizing and adapting to these changes is crucial for business success. This lesson will introduce key economic concepts—supply, demand, and market dynamics—through the lens of entrepreneurship. Students will then apply their knowledge by analyzing case studies, conducting research, and making pricing decisions for a fictional business.

Objectives:

After completing this lesson, students will be able to:

• identify factors that influence pricing decisions for entrepreneurs, including supply, demand, and competition.
• explain how determinants of demand and supply affect the market and pricing decisions for entrepreneurs.  
• analyze case studies to determine how market conditions impact pricing strategies for entrepreneurial ventures.

Voluntary National Content Standards in Economics

• Standard 7: Markets and Prices
  • A market exists when buyers and sellers interact. This interaction determines market prices and thereby allocates scarce goods and services. 
• Standard 8: Role of Prices
  • Prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives.
• Standard 9: Competition and Market Structure
  • Competition among sellers usually lowers costs and prices, and encourages producers to produce what consumers are willing and able to buy. Competition among buyers increases prices and allocates goods and services to those people who are willing and able to pay the most for them. 
• Standard 14: Entrepreneurship
  • Entrepreneurs take on the calculated risk of starting new businesses, either by embarking on new ventures similar to existing ones or by introducing new innovations. Entrepreneurial innovation is an important source of economic growth.  

Concepts

• Demand
• Entrepreneurship
• Markets
• Supply