[7a] Elasticity Roleplay — Sellers Set Prices
Seller teams (1/3 of the class; e.g. 10 teams)
Each team can set price within the range $1–100. Monopoly medicine (inelastic good)’s price is fixed at $90 or higher. Each producer has a budget of $50 for producing each good each round.
| Item | # of teams selling the good | Price | Production cost |
|---|---|---|---|
| Specialty coffee (luxury) | 2 | (set by each seller team) | $5 each |
| Toilet paper (necessity) | 3 | (set by each seller team) | $3 each |
| Snack 1 | 2 | (set by each seller team) | $2 each |
| Snack 2 | 2 | (set by each seller team) | $2 each |
| Monopoly medicine | 1 | $90 or higher (set by seller) | $10 each |
Consumer teams (2/3 of the class; e.g. 20 teams)
Each team can spend $150 maximum each round. Each product gives utility within the range 1–10. Four teams must buy one monopoly medicine, otherwise they fail the game.
Each consumer team sets their utility table in advance to Round 1. Every 1 utility will be translated to $10 at the end of the game.
| Item | # of teams in need of this good | Utility score (1–10) | Priority ranking (1–5) |
|---|---|---|---|
| Specialty coffee | n/a | (set by each buyer team) | |
| Toilet paper | n/a | (set by each buyer team) | |
| Snack 1 | n/a | (set by each buyer team) | |
| Snack 2 | n/a | (set by each buyer team) | |
| Monopoly medicine | 4 | (set by each buyer team) |
For students’ worksheet
Utility table:
| Item | Utility score (1–10) | Priority ranking (1–5) |
|---|---|---|
| Specialty coffee | ||
| Toilet paper (necessity) | ||
| Snack 1 name: | ||
| Snack 2 name: | ||
| Monopoly medicine |
Round tracking:
| Round | Goods bought list ($price bought at) | Total expense | Total utility |
|---|---|---|---|
| 1 | |||
| 2 | |||
| 3 | |||
| Total | – | $ ?? | ?? |
Rounds
- Round 1: Without tax – first price setting
- Round 2: Without tax – second price setting (adjust/maintain prices based on Round 1 demand responses)
- Round 3: Government imposes tax on sellers
End of the game – Sellers measure total profit = (price – cost) × quantity sold. Consumers measure total utility gained (1 utility = $10).
Discussions
- Who bore the burden – buyer or seller? Which goods passed more of the tax to consumers, and why?
- Which item was most/least price-sensitive?