Sandwiches and Elasticity Context-Rich Problem
This material is replicated on a number of sites as part of the SERC Pedagogic Service Project
In this scenario-based problem, students are asked to apply what they know about elasticity and supply and demand to address a concern of a small business in a real life setting.
Students will apply what they learned about elasticity and recall their knowledge in supply and demand to solve a common problem a small business may face in the real world.
Context for Use
This activity can be used in a college level Principles of Microeconomics class of any size. You can choose to give the assignment outside of class as homework or in class either as an individual assignment or part of an exam or as a group work where students solve the problem in pairs and the class comes together as a whole afterwards to discuss the solution. If conducted in class, roughly 10-15 minutes will be needed.
Description and Teaching Materials
Your family owns a small sandwich shop called Healthy Hearty Sandwich that mainly caters to local residents in Glendale. As of late, your parents are concerned that business has been slow due to the economic downturn. Your father suggests that you increase the price of sandwiches so you can earn more profit for every sandwich you sell, but your mom is worried that this is going to lose too many customers. She reminds the family that last time you raised the price by 10%, half the people went to your competitors' store My Sandwich Is Better Than Yours. Your sister wonders if there is anything that can be done to attract more customers other than through a price cut. Your brother remembers that you are currently taking microeconomics and asks if you can share some insight to what the family can do. What economic wisdom will you share with your family? Keep in mind that no one in the family has formally taken an economics class before, which means you should try to avoid too much economic jargon or technicalities. Keep your response to no more than one and no less than half a page.The text of the problem can be downloaded as a Word document here: Elasticity Context-Rich Problem (Microsoft Word 2007 (.docx) 11kB Mar27 12)
Teaching Notes and Tips
- The activity is typically given after elasticity has just been discussed in class, at which point supply and demand had already been studied earlier in the term.
- It might be necessary to remind the students, especially if it is the first time students are exposed to this type of problem, that the audience be very clear in the answer. The response should not be written as an exam or homework essay, but as if they are actually talking to the person in the scenario.
- This activity can also be done more informally using think-pair-share.
- The problem can vary in technicality by asking students to graph and calculate the answer in addition to explaining their solution in plain language.
- The problem can check for students' ability to recall and combine their learning at different points in the term to solve a real world issue.
- Students should be able to not only respond to the problem but defend their answer with logic and concrete economic reasoning.