Starting Point: Teaching and Learning Economics > Teaching Methods > Context-Rich Problems > Examples > Tariff Context Rich Problem

Tariff Context Rich Problem

Joann Bangs
St. Catherine University
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This material is replicated on a number of sites as part of the SERC Pedagogic Service Project

Summary

This activity consists of a single scenario-based problem allowing students to apply concepts of efficiency and surplus in the context of a change in a tariff.

Learning Goals

Students will be able to apply concepts of efficiency, consumer surplus and producer surplus in a realistic setting.

Context for Use

This problem is appropriate for a micro principles course. This activity can be used in any size class. It can be used inside of class, or assigned as a homework or exam problem. If the problem is done in class, it will take about 5-10 minutes to complete.

Description and Teaching Materials

You are having lunch with a good friend of yours that is a member of the U.S. House of Representatives. She is serving on a committee that is considering a bill that would phase out our current tariffs on foreign raw sugar over the next five years. It is expected that removing these tariffs would cause the wholesale price of raw sugar to drop from about 25 cents a pound to about 5 cents a pound in the United States. Because she knows you have studied economics, and that you always carefully consider all sides of an issue, she asks your opinion on the bill. What will you tell her and why?


The text of the problem can be downloaded below.
Tariff Context Rich Problem (Microsoft Word 2007 (.docx) 10kB Mar14 12)



Teaching Notes and Tips

Students will need to have discussed consumer surplus, producer surplus and tariffs prior to completing this activity.

This problem can be used to assess students' understanding of the effects on surplus of a change in a tariff. Students should be able to describe how the reduction in a tariff will cause consumer surplus to increase, producer surplus to decrease and deadweight loss to decrease.

If your students are new to context rich problems, you may need to help your students get comfortable with them. For example, you may want to include more prompts in the problem to help the students narrow their focus, such as "How will the consumers of sugar be affected?" and "How will domestic producers of sugar be affected?"

Assessment

The purpose of the assessment will determine whether or not you need a rubric. If the problem will be graded, it may be helpful to give the students a rubric such as:


References and Resources

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