A Classroom Experiment Demonstrating the Generation of a Market Demand Function and the Determination of Equilibrium Price

Abstract

Economics instructors continue to look for simple and effective means of motivating students while conveying important basic principles. Dennis Weidenaar describes a supply and demand simulation which can be used in any classroom to show how a market demand function is generated and how equilibrium price is determined. Involving little in the way of preparation, this activity simply calls for the sale of apples to students by the instructor, with individual and aggregate demand schedules being calculated. Such concepts as price and income elasticity, profit maximization, opportunity cost, market organization (monopoly, perfect competition and monopsony), consumer's and producer's surplus, and total, marginal and average revenue and cost can be illustrated through the use of the simulation and the suggested discussion questions.