An excellent example to discuss in class when covering price controls, market efficiency, or international trade is the effect of U.S. sugar subsidies. Most Americans do not realize the high price they pay for sugar, mostly because it's such a low price to begin with. But looking at the efficiency of the industry as a whole, the costs are staggering. There are also indirect effects as bakers and candy producers pass on higher costs to consumers, or move to other countries (taking jobs with them) in order to save on input costs. Sugar Price Supports Are Not So Sweet​ U.S. News and World Report (Sept 5, 2014) ... View more

Another Day in Paradise (Econ video, song by Phil Collins) Lyrics address homelessness; video notes highlight why this is an economic issue ... View more

Amusement park pricing (context-rich problem) Students consider whether an amusement park should increase prices in order to increase revenue. Note: Student responses could be collected using clickers (see example in Clicker Questions) ... View more

Aggregate demand-driven macroeconomic equilibrium (experiment) Students must allocate to income to consumption or spending, then calculate aggregate income in each period. For larger classes, students can work in groups. ... View more

A Prisoner’s Dilemma Classroom Activity with iClickers to Explain Game Theory to Economics Students This is a very simple classroom game I do with my economics students to cover ideas of Nash equilibrium and Prisoner's Dilemma.  It can also show ideas about public goods and externalities.  It is an adaption from Hemenway et al 1987 (see below).  But, it has also been used in different ways by many different instructors.  How to Setup the Prisoner’s Dilemma Classroom Experiment Extra Point Question If everyone chooses to collude, all students get 10 bonus points in final exam If everyone chooses to collude, but one person defect, that person defecting gets 50 bonus points and no other student get any points. If more than 1 person chooses to defect, no student get any points. Allow the students to vote (I use iClicker in my class; but any system would work well). Show students the results. Students are usually very upset when I show the results for the first time.  So I always allow them to play more than one round.  Sometimes in between rounds, I ask them for ideas on how to "solve" the dilemma.  Notice on the video below how the last round students are allowed to switch iClickers, yet the outcome does not change!!! Anyway, it is a great activity because it takes very little effort to prepare, students like it a lot, and it has many points for applications and discussion. Video The video below shows an instance of me playing the game with my students.  On this occasion, I had about 500+ students in the classroom playing the game.  Notice the distribution of the answers after I close the voting (remember, A) is colluding and B) is defect): most students choose to collude, but a few (around 30 or so) choose not to collude.  PPT Slides Dropbox - Slide-for-Game-Theory-Activity.pptx REFERENCES Hemenway, David, Robert Moore, and James Whitney. "The Oligopoly Game." Economic Inquiry, 25, Oct. 1987, pp. 727-730; contains copy for class instructions; moore@oxy.edu ; whitney@oxy.edu  ... View more

A Goldsmith Exercise for Learning Money Creation Journal of Economic Education 44(4) 2013 (experiment) In the exercise, students pretend they are in the eighteenth century and simulate interactions among a goldsmith, a gold depositor, a merchant, and a borrower, in order to better understand how banks create money. ... View more

Understanding the Impact of Policy (cooperative learning) This 'send-a-problem' exercise requires students to evaluate the potential impact of fiscal and monetary policy on problems associated with different states of the economy. Can be scaled up for any size class.   ... View more

Just to See You Smile (Econ video, song by Tim McGraw) Singer will do 'anything' for his girlfriend, indicating his demand for her is perfectly inelastic. ... View more

Impact of federal deficits (cooperative learning) Students analyze different endings to a fable about government debt. Answer to follow-up questions could be collected using clickers   ... View more

Discouraged workers (context-rich problem) Students calculate different versions of the unemployment rate to understand the definition of who is and is not employed. Responses could be collected using clickers.   ... View more

Economic growth game (experiment) Student groups represent regions that specialize in particular items; in each round, they must trade with other regions to survive and grow. ... View more

The most important characteristic of monopolistic competition is product differentiation. But students sometimes find it difficult to relate how product differentiation translates into potentially widely varying prices.   The example I use in class is the market for blue jeans. There are hundreds of brands, ranging from the least costly brands (Old Navy, H&M, Wrangler) that cost $20-$40 to the most expensive brands (True Religion, Diesel) that cost $200 and up. And one can find nearly all of these brands in a typical large mall. Part 1: Have the class discuss the features that differentiate one brand from another. Students typically have no problem talking about the style, fit, feel, logo, etc. Part 2: Search on the Internet for images of different brands of blue jeans (focusing on the back where most features appear such as the pocket design and logo). Show each image one at a time and have the class guess which brand of jeans they are. The point of this exercise is that if a consumer truly values expensive jeans, then that consumer should in theory be able to easily tell the difference between cheap and expensive jeans. Surprisingly, many cannot. For example, I find that many students cannot tell the difference (by sight alone) when someone is wearing a $30 H&M jeans versus a $200 pair of Diesel jeans. Part 3: After the guessing game, discuss with the class how the expensive brands are able to distinguish themselves and to generate a steeper demand curve that allows them to charge higher prices, while less expensive brands tend to have more competition since consumers are more willing to try different brands. This activity takes 10 to 15 minutes of class time, and is a fun way to introduce monopolistic competition before proceeding to the graphical analysis. One final note: in Part 2, include a pair of Guess jeans in the mix, and when you show it, tell the class "Now I want you to take a good guess what brand this is." "Seriously, I want you to GUESS what brand it is!." It's funny how almost no one catches the hint until after you reveal the brand name. ... View more

Ticket trading (experiment, demonstration) Students are given tickets and asked to report their willingness to pay for their assigned ticket; they are then given an opportunity to trade and willingness to pay is re-calculated. Extensions include restricting and then opening who students can trade with, and allowing students to place monetary bids for certain tickets. 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 to total social benefit between rounds. Can follow with discussion of allocation mechanisms by asking students for alternative ways to allocate the tickets. Please see Trade Clicker Questions​ document.   ... View more

(experiment) Students produce different combinations of two products (links and smiles) with a given set of resources. The results are used to create PPFS. 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

  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