Marginal Utility Classroom Experiment

Edwin D. Fagin, Cosumnes River College
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This material is replicated on a number of sites as part of the SERC Pedagogic Service Project
Initial Publication Date: August 2, 2017

Summary

A classroom experiment that engages student interest in the concept of utility by conducting a real world experiment in the classroom in real time. The results are always interesting for students and drives home the basic concept of utility. This can be used as a basic application of utility or can be used as a primer before diving into some of the more technical applications of utility including marginal utility, total utility, and maximizing utility given prices, income and preferences.

This activity is best presented the lecture before you will develop the topic in class. I like to do this between the topics of supply/demand and utility.

Used this activity? Share your experiences and modifications

Learning Goals

Learning Objectives include recognizing the law of diminishing marginal utility, linking the theoretical model with a real world classroom example and be able to define the Economic terms utility and diminishing marginal utility. After completing the in class experiment students should have a better understanding of the Economic concept of utility/diminishing marginal utility. Students should recognizing the law of diminishing marginal utility and be able to link the Economic concepts in theoretical model with the real world classroom example. Students should be able to draw a diagram showing the concept of diminishing marginal utility.

Context for Use

This experiment is best suited for use in an Economics course. The experiment can be used to motivate the development of the concept of utility and diminishing marginal utility. This can be used as a stand only exercise or used as an introduction to the Economic concept of utility/diminishing marginal utility before a more formal graphical and mathematical development of the topic is presented.

Description and Teaching Materials

Activity/Experiment: Purchase some consumption goods and some small plastic cups at your local market the day before you plan to do the experiment. I have found bananas, chocolate milk, orange juice, donuts, and candy to be the most widely liked by students. Buy enough of the product so that the student does not run out of product to consume during the lecture. I usually try to get 6-8 students to participate in the experiment (be sure to select a representative sample of the class). Students will consume only one product and cannot consume anything else during the experiment (class period).
Example1: Student 1 picks chocolate milk. Have the student pick up a plastic cup and a carton of chocolate milk (pint or larger). Have the student pour a half a cup (you can use other amounts depending on your situation). After drinking the first half cup the student will pour another half cup. After the student has finished drinking the second half cup of chocolate milk the student will compare the satisfaction they got from consuming the second half cup of chocolate milk to the first half cup of chocolate milk they started with. The comparison has several choices to make the decision and application and data collection more manageable. Compared to the previous half cup of chocolate milk you consumed this half cup of chocolate milk gave me ___________ than the previous half cup of chocolate milk.
More satisfaction [ ] Same satisfaction [ ] A little less satisfaction [ ] A lot less satisfaction [ ]

The students should continue consuming the product until the end of class or until they feel they have reached the limit on the amount they can consume.

Example2: Student 2 picks donuts. Have the student pick what flavor donut they are going to consume. Have the student eat the first donut. After eating the first donut the student will eat another donut. After the student has finished eating the second donut the student will compare the satisfaction they got from consuming the second donut to the first donut they ate when they started the experiment. The comparison has several choices to make the decision and application and data collection more manageable. Compared to the previous donut you consumed this donut gave me ___________ than the previous donut.
More satisfaction [ ] Same satisfaction [ ] A little less satisfaction [ ] A lot less satisfaction [ ]

The students should continue consuming the product until the end of class or until they feel they have reached the limit on the amount they can consume.

Use the following template for recording the student's preferences. Link to template.


How much product should you buy for this experiment? Example of amount of product purchased for in-class experiment. 6 bananas, one 64 ounce carton of orange juice, two packages of regular size donuts-mixed or single flavor, 2 cartons of chocolate milk (pint or larger), 6 regular size Snickers bars, 6 regular size Recess Peanut Butter cups, etc. The only time I have ever run out of material for this experiment in 15 years was when one student ate what appeared to be a half a dozen bananas in one lecture (this has never happened again but you have been warned).
Handout for recording data on consumption (Acrobat (PDF) 315kB Aug1 17)



Teaching Notes and Tips

Save about 15 min at the end of the lecture to review the results with the class. This can be done graphically on the board. In most cases students will provide real time data on the idea of diminishing marginal utility. See graphical example below.




In some cases you will have students that appear to like the 2nd and 3rd units more than the first. I usually direct students to the fact that most students in the class have preferences that are in line with the theoretical model and remind students that there can be instances where data does not appear to support the theoretical model and mention that they will likely deal with cases like these in the future when they transfer to a university majoring in Economics.

Assessment

Students can be assessed on several levels: 1) definition questions—When the additional satisfaction from consuming one more unit of a product declines.... 2) computational questions relating to marginal utility. Use the following table to calculate total utility and marginal utility. 3) Inferential questions—if the marginal utility of the 3rd unit is 10 then the marginal utility of the 4th unit will be __________. 4) Graphical questions—students can interpret a graphical display (what is the marginal utility of the 4th unit (what is the total utility of consuming 4 units). or students may be asked to create a graphical display from raw data—this will include labeling the axes, ensuring that the graph accurately captures the scale of the data, and explaining if necessary what the graph shows (diminishing marginal utility).

References and Resources