Summary: Students trade in an experimental market with and without a price ceiling or a price floor. This experiment can be used to illustrate how price, quantity supplied, quantity demanded, consumer surplus and producer surplus change as the price control is instituted. Price controls can be set to be binding or not. These experiments can be conducted on EconPort in the classroom or outside of classroom time. Results are discussed in lecture.
Motivation: Most students have difficulty understanding the concept of a binding price ceiling or price floor and the disequilibrium effects on quantity supplied and demanded. This module offers pre-set experiments that can be run to illustrate these concepts. Subjects learn on their own how the introduction of a price ceiling or floor changes the quantity traded and the surplus that the consumer and producer receives. Lecture materials, including student instructions, pre-experiment and post-experiment discussion, follow.
Concepts Covered:
