The following classroom activity is a fun way of introducing the benefits of trade, and can be used in both small and large classrooms. For small classes (< 20 students), I use this activity on the first day of class as an icebreaker, allowing students to introduce themselves. For large classes, I wait until I cover trade, and ask for 12 volunteers to come to the front of the classroom. Preparation: Purchase 12 or more random items at a Dollar Store. Find items that would be useful for some students but not others. Ideal items include a cat toy, tape measure, thank you cards, Spiderman tooth brush, Hello Kitty stickers, chocolate, pack of gum, box of candy, basic calculator, band aids, and balloons. Place each item in a brown paper bag and staple it shut. Part 1: Have each participating student select a bag containing a random gift. Part 2: Have each student introduce themselves, and then open the bag. The student then describes the item (this part is often funny depending on the item), and the rates the value of the item on a scale from 1 (worthless) to 10 (extremely valuable). Have a TA or another student keep track of names and values. Part 3: Tell the students that these gifts are theirs to keep. However, you are allowing them an opportunity to obtain a more valuable gift to them by trading with any other student, if they choose. Allow one minute to allow students to trade. Part 4: Have each student state whether they traded their item; and if they did, rate the new item. Part 5: Show the class the list of students and gift ratings. Show the first column, and explain the concept of autarky (no trade). Although every item was purchased for $1, the ratings are very different from one another. This illustrates the difference between production efficiency and allocative efficiency. Production efficiency is achieved because each student received a gift at the lowest cost (effort of volunteering), but allocative efficiency was not achieved because not everyone ended up with something they desired. Compare this scenario with a real-life example of something a country is good at producing but doesn’t consume; for example, China produces NFL jerseys efficiently, though hardly anyone in China buys them. Then discuss how trade allows some students to improve their outcome without anyone else being worse off. This is a Pareto efficient improvement, and also improves allocative efficiency. Calculate the total gains from trade by comparing the totals before and after trade. Lastly, discuss why some people are against trade. Explain that in this activity, every student represented a country. In reality, every country has many people. If instead we had groups of students representing a country, some members might end up with an item that others in the group wanted. In other words, although countries benefit, not everybody in the country benefits. This activity takes just 10 to 15 minutes of class time, and is a fun way to introduce trade and efficiency concepts. ... View more

Trading with comparative and absolute advantage (cooperative learning, experiment) Students are separated into groups, representing different countries, and given worksheets with production information. One country has an absolute advantage in both goods. Groups choose resource allocations to maximize utility and then can trade with the other country. For larger classes, can have multiple groups for each country (just have an equal number of groups for each country) and then pair up groups for trading. There are many variations of this available (for example, see here, and here)   ... View more

Double-oral auction (experiment) The grand-daddy of economics experiments! Students are assigned roles as buyers and sellers, and trade in a simulated market. There are many, many variations of this activity (see, for example, here or here). Extensions can include shifting supply or demand, imposing price controls, taxes, or trade barriers. For very large classes, this activity may be best done using online tools, such as Veconlab or Moblab ... View more

Determinants of demand and supply (cooperative learning) Students are assigned one of the determinants of demand or supply and must come up with an example of their assigned determinant, then show the impact of that change on equilibrium. ... View more

Corn prices (context-rich problem) Students are asked to explain the impact of rising corn prices on secondary markets. Can have students complete individually, with think-pair-share or small groups. In larger classes, student responses can be collected using clickers.   ... View more

Airline revenues (context-rich problem) Students must use a supply and demand diagram to explain an increase in airline revenues. Can have students complete individually, with think-pair-share or small groups. In larger classes, student responses can be collected using clickers.     ... View more

Changing the minimum wage (context-rich problem) Student analyze a proposal to raise the minimum wage. an have students complete individually, with think-pair-share or small groups. In larger classes, student responses can be collected using clickers.   ... View more

Feeding students candy (experiment) Have students rate their happiness (utility) as they consume more and more chocolate. For larger classes, can be done with a sub-set of students as a demonstration for the rest of the class. Have students predict what will happen between rounds. here are many ways to vary this activity with different goods (e.g., have students consume marshmallows instead of chocolate).   ... View more

Deriving a demand curve (experiment) Instructor asks the class how many students would be willing to pay various prices for a specific good. Results are tabulated into a demand curve. Extensions include changing the conditions to shift the curve (e.g., would demand for a cold soda change if the day were hotter/colder). or larger classes, can be done with a sub-set of students as a demonstration for the rest of the class, or results can be collected with clickers. Salemi, Jee 2009, describes similar activity but asks students to name their price (i.e., runs an auction) for a unique good, rather than naming price and tabulating quantity. This focuses attention on reservation prices.   ... View more

Demand for champagne (context-rich problem) Students must analyze a situation in which a newspaper article confuses movements along the demand curve with shifts in the curve. For larger classes, could be done with a sub-set of students as a demonstration for the rest of the class. Follow-up questions for a representative graph could be asked using clickers.   ... View more

Deriving a supply curve (experiment, demonstration) Instructor asks students the minimum price they would accept in order to shave their head. Alternatively, instructor could name prices and ask class how many students would be willing to shave their head at each price. Either way, results are tabulated into a supply curve. For larger classes, can be done with a sub-set of students as a demonstration for the rest of the class, or results can be collected with clickers. ... View more

Many people do not realize that Hawaii is the world's largest producer of farmed shrimp. In 2014, shrimp was Hawaii's largest export (and not pineapples as commonly assumed). Much of this shrimp goes to Asia, where some end up in factories where low-wage laborers peel and process the shrimp. This has led to some debate regarding the fate of laborers (some of whom were enslaved) to process seafood that is eventually exported back to the United States. This is a good topic to discuss when covering international trade, production, and labor markets. Hawaii Is the World's Shrimp-Breeding Capital​ Hawaii Business (September 2014) Hawaii Ranks Biggest Exporter of Shrimp​ KITV.com (December 15, 2015) ... View more

Cafeteria trays (context-rich problem) Students analyze a proposal to eliminate trays in the school cafeteria. Can have students complete individually, with think-pair-share or small groups. In larger classes, student responses can be collected using clickers.   ... View more

Making rational decisions in economics - the role of sunk and marginal costs (cooperative learning, Just-in-time-teaching) Students consider whether a decision to go to the beach in the rain so as not to 'waste' a pre-payment that was already made is "rational" Can have students complete individually, with think-pair-share or small groups. In larger classes, student responses can be collected using clickers.   ... View more

Asymmetric Information, Bargaining, and Comparative Advantage in Trade Relationships Southern Economic Journal Vol. 74 No. 2 (October 2007) by Eric Chiang Description of Game The concept of comparative advantage is a fundamental tool in economics. Yet, it is a concept that new students of economics frequently find challenging to grasp. In this interactive classroom game, three essential lessons of comparative advantage are emphasized: 1) individuals can have a comparative advantage (and thus benefit from specialization) in an activity despite not having an absolute advantage, 2) the gains from specialization are greatest when individuals have the most heterogeneous skill sets, and 3) the extent of each individual’s share of the gains from specialization is often left to negotiation, with asymmetric information playing an influential role. This classroom game allows each player to possess a unique production function, thus better resembling the diverse pool of potential trade partners that characterizes real-life trade.     ... View more