Profit & Loss Lesson Plan

Instructor: Tammy Galloway

Tammy teaches business courses at the post-secondary and secondary level and has a master's of business administration in finance.

A company may have a great product but if they are losing money, they will eventually go out of business. This lesson plan explores profit and loss from an economic perspective. Students will read the lesson, answer questions, complete an activity and take a quiz.

Learning Objectives

By the end of this lesson, students should be able to:

  • explain how to calculate profit and loss
  • describe how a business can obtain a supernormal profit
  • define monopoly and oligopoly
  • discuss how businesses operate in perfectly competitive markets

Length

60 minutes

Curriculum Standards

  • CCSS.ELA-Literacy.RH.11-12.4

Determine the meaning of words and phrases as they are used in a text, including analyzing how an author uses and refines the meaning of a key term over the course of a text (e.g., how Madison defines faction in Federalist No. 10).

  • CCSS.ELA-Literacy.RH.11-12.6

Evaluate authors' differing points of view on the same historical event or issue by assessing the authors' claims, reasoning, and evidence.

  • CCSS.ELA-Literacy.RH.11-12.7

Integrate and evaluate multiple sources of information presented in diverse formats and media (e.g., visually, quantitatively, as well as in words) in order to address a question or solve a problem.

Materials

Instructions

  • Begin the lesson by asking students to discuss the importance of business profit.
  • Then explain that this lesson explores concepts called normal and supernormal profit and loss.
  • Distribute the Normal Profit, Supernormal Profit & Loss Situations lesson, select a volunteer to read 'Profit and Loss Situations' and 'Normal Profit and Loss', then ask the class to answer the following:
    • Explain how Jack's company receives revenue.
    • Identify some additional expenses of Jack's company that are not listed in the lesson.
    • Explain how the business is operating in a perfectly competitive market.
    • Describe how Jack's company can incur a loss.
  • Now choose another student to read 'Supernormal Profit' then pose these discussion points:
    • How does supernormal profit occur?
    • Why does the author state that supernormal profit may be short term when a new product is introduced?
    • What is the difference between oligopoly and monopoly?
  • Now require students to read the 'Lesson Summary' independently.
  • Next show the lesson quiz and allow students to work in pairs, then review the answers.

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