Price Discovery and Auctions Activity | Lesson
Resources are scarce (neither our resources nor our lives are infinite), so as a society we want to do the most we can with what we have. We also want to create more opportunities for future generations. Markets are one of many methods societies have devised for allocating scarce resources.
In this lesson, students will have an opportunity to participate in a “labor” market, either as a buyer of labor units or a seller of labor units. They will have access only to their information (value or cost), and they will be able to observe others’ transactions. From this activity they will learn that when buyers and sellers have private (and accurate) information and where prices are free to move, markets allocate resources in a way that maximizes value. We call this value the gains from trade. We are better off because we trade.
(PDF Attached, if the PDF fails to load the instructions for the activity can be found here)
