ACTIVITY 2 – LET’S MAKE IT FAIR

Introduction

In this activity students participate in a socialist society and try to achieve a fair allocation of stickers and candy by making production and pricing decisions as a collective, only to discover how the knowledge problem, and positions of power and privilege prevent their desired outcome.  

Video Instructions

Key Terms

Knowledge Problem
The idea that the information for economic planning is distributed across individual members of society and cannot be known by central planners.

Markets
A place or situation where buyers and sellers come together to voluntarily exchange goods and services.

Scarcity
The nature of having unlimited wants and needs and limited resources with which to fulfill them.

Self-Interest
The act of seeking one’s own personal gain.

Socialism
A society in which the state controls resources and makes decisions about production and equitable distribution.

Objectives

Students will be able to:

• Describe how centrally planned economies fail to achieve equitable or fair outcomes.
• Define the knowledge problem.
• Explain how markets help overcome the knowledge problem.

Voluntary National Content Standards

CONTENT STANDARD 8: Role of Prices

Students will understand that prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives.  

• Benchmark 4: Scarce goods and services are allocated in a market economy through the influence of prices on production and consumption decisions.

Time Required

45 minutes