Indiana Social Studies E.4.1
The Standard
Explain how markets underproduce public goods, and analyze the role of government to resolve those market failures.
2026 Indiana Academic Standards: K-12 Social Studies · Students explain that because resources are limited, people must make choices, understanding the role that supply, demand, prices, and profits play in a market economy. Key elements of the course include study of scarcity and economic reasoning, supply and demand, market structures, the role of government, national economic performance, the role of financial institutions, economic stabilization, and trade.
Teacher's field guide
What This Standard Means
What Students Need to Do
- Students identify shared goods, such as street lighting, that people can use without paying or using them up. They explain why private businesses may provide too little of these goods and how taxes can pay for them.
What Mastery Looks Like
- A student can explain why a streetlight benefits households that did not pay for it, so voluntary payments may fall short. They can describe how a city uses tax money to install the lights.
Common Misconceptions
- Students may call anything the government provides a public good, including a crowded, fenced pool. They may think streetlights cost nothing because people use them for free, or assume everyone will pay voluntarily.
How to Assess It
- Exit ticket: A company considers installing streetlights on a public road. Why might it install fewer lights than residents want, and how could the city pay for more?
Lesson moves
Ways to Teach It
Give six students two tokens each; collect voluntary tokens for a six-token streetlight, then reset and collect a one-token tax.
Ask: If everyone benefits from a streetlight, why might each household wait for someone else to pay? What changes with a tax?
Sort streetlights, pizza slices, crowded parks, and toll roads into a grid: can nonpayers be excluded, and does use reduce availability?
Show a photo of a streetlight outside school; students list who benefits and explain why a city taxes households to pay for it.
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Printable E.4.1 Worksheet
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Related Standards
- 3.C.1
Discuss the reasons governments are needed and identify specific goods and services that governments provide.
- E.2.2
Provide examples of how consumers ultimately determine what is produced in a market economy.
- E.4.2
Describe how the government taxes negative externalities (spillovers) and subsidizes positive externalities to resolve the inefficiencies they cause.
- GE.2.4
Explain the fundamental role, if any, of government in the various economic systems.
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