Using Clickers to Generate Supply and Demand Curves

This exercise illustrates the law of demand (that demand curves are downward sloping) and the law of supply (that supply curves are upward sloping). Students tend to have an easier time understanding those concepts when the data used to generate the supply and demand curves came from them.

This activity can be used in any economics class that includes the concepts of the laws of supply and demand. The class size is irrelevant, but I use it in large lectures. There are two alternatives that will take different amounts of time to do. The first alternative will take at least two class periods. You will take the data from the clickers, include it in a spreadsheet, and graph the demand and supply curves from that data. Gathering the data on the clickers only takes a few minutes. Since it takes some time to create the spreadsheet, it is best to pull the data out of the clicker software and create the spreadsheet outside of class and present the completed supply and demand curves in the next class period. The second alternative uses some graphing software available online at EconPort. The link to the Supply and Demand Graphing Tool (along with instructions for a similar experiment) is found on EconPort's Introduction to Demand and Supply. The second alternative takes a few minutes to gather the data from the clickers, and using the Graphing Tool only adds a few more minutes to show the graphs on the fly in the classroom.

Open the clicker software. Pose the questions to the students and have them enter their answers as numeric data. Pull the raw data from the clicker software and import it to a spreadsheet. Organize a frequency chart from the raw data. Add a column for the cumulative frequency at each price. Use the prices and the cumulative frequencies to generate the values for the quantities supplied (or demanded) for each price and the ordered pairs for the supply and demand curves. A sample spreadsheet with data is attached. If you want to graph the supply and demand curves immediately in class, make use of the Supply and Demand Graphing Tool available at the EconPort website. In this alternative, you can take the raw data directly from the clicker software and input it directly into the Supply and Demand Graphing Tool. For a link to the Graphing Tool and instructions about how to use it, read EconPort's Introduction to Demand and Supply.

Sample Spreadsheet of Supply and Demand (Excel 49kB Oct3 09)

It's useful to review the reasons why the supply curve values are minimum willingness to accept, while the demand curve values are maximum willingness to pay. If someone said that they would shave their head for $20 and they were offered $200 to do it, would they do it? Of course. You can also use this as an opportunity to discuss the concepts of consumer and producer surplus. In the previous example, it can be pointed out that the producer surplus is $180, which is the difference between the minimum amount they were willing to accept ($20) and the amount they were offered ($200).

A good way to follow up this activity is to present different prices and ask for a show of hands for how many students would shave their heads for each different price. Raise the prices and watch how the quantity of shaved heads increases as the price increases. You can observe whether or not students really understand the idea of supply curves representing minimum willingness to accept by seeing if those that raise their hands when the price is low know if they should continue to raise their hands as the price increases (they should). You can do something similar for observing the law of demand, this time, starting with higher prices and lowering the prices to observe the quantity demanded increasing.

The primary outside resource that may be used in this exercise is the EconPort website (http://www.econport.org). This is a website with many resources for teaching economics using classroom experiments.