Time required: 1/2 class period
Materials: one bag of small candy bars
Concepts:
- utility
- marginal decision-making
Procedure:
- Ask for a volunteer who is hungry and who likes the kind of candy bars you have on hand. Move the student to a desk at the front of the room and offer him a candy bar to eat.
- While the student is eating, continue with your class lecture/discussion. Introduce the concept of utility, explaining that it serves as a measure of consumer satisfaction.
- When the volunteer student
finishes the candy bar, ask him to rate how good it was, or
how much satisfaction he derived from eating it on a scale of
1 - 10, where 10 is the most satisfaction. Ask how much he would
have been willing to pay for the candy bar if he had to pay.
Enter the results on the board:
Candy bar #
Utility / Satisfaction
Willing to pay . . .$
1
2
etc.
- Ask the student whether he wants another candy bar, and repeat the procedure as long as he is willing to keep eating. Do not allow him to leave to get a drink of water or a soft drink, and do not change type of candy bars.
- When the student is unwilling to eat more candy bars, thank him and stop the "experiment." Direct student attention to the board and the pattern of diminishing utility demonstrated there. Discuss the relationship of diminishing utility to willingness to pay.
Homework assignment:
Ask students to bring in advertisements that show the principle of diminishing utility ("Buy 1, get the second for 1/2 price," or "Buy 1 for $5, or a package of 4 for $16," etc.)
Supplement:
Ask students to draw graphs (quantity on the horizontal axis and utility on the vertical axis) for a variety of different products and consumers: hamburgers for Michael Jordan and hamburgers for a kindergartner, washing machines, french fries, etc.
Copyright © 1999 Foundation
for Teaching Economics
Permission granted to copy for classroom use.