Building a Smooth Production Possibilities Frontier: A Classroom Experiment

2005 ◽  
Author(s):  
Nasri Harb
Keyword(s):  
Classroom Experiment ◽  
Production Possibilities Frontier

scholarly journals CLASSROOM EXPERIMENT AS A TEACHING METHOD IN NATURAL RESOURCE AND ENVIRONMENTAL ECONOMICS COURSE EKSPERIMEN KELAS SEBAGAI METODE PEMBELAJARAN DALAM MATA AJAR EKONOMI SUMBER DAYA ALAM DAN LINGKUNGAN

2014 ◽  
Vol 2 (2) ◽  
pp. 1
Author(s):  
ALIN HALIMATUSSADIAH
Keyword(s):  
Public Goods ◽  
Environmental Economics ◽  
Natural Resource ◽  
Teaching Method ◽  
Common Pool Resource ◽  
Public Goods Game ◽  
Common Pool ◽  
Classroom Experiment ◽  
The Impact ◽  
Rules Of The Game

The use of classroom experiment as teaching method in economic courses is increasing overtime. However, it is not widely used in developing world. In the experiment, students can learn using their own experience how economic agents behave and how they make decisions in a certain situation setting. This paper aims to describe the advantage of the method, practical issues in conducting classroom experiment, and examples of two classrooms experimental games in natural resource and environmental economics course: a public goods game and a CPR (common pool resource) game. In the games we introduce different rules of the game to give an understanding the impact of different rules of the game to the result of the game. We also discussed the relation between individual characteristics and his/her decision in the game.   Keywords: classroom experiment, public goods game, CPR (common-pool resource) game, natural resource and environmental economics

scholarly journals Bertrand Oligopoly And Factors Markets With Scarcity And Price Controls

2012 ◽  
Vol 10 (6) ◽  
pp. 355
Author(s):  
Randall E. Waldron ◽  
Michael A. Allgrunn
Keyword(s):  
Minimum Wage ◽  
Price Competition ◽  
Price Controls ◽  
Classroom Experiment ◽  
Differentiated Goods ◽  
Rental Rate ◽  
The One ◽  
Input Markets ◽  
Bertrand Oligopoly ◽  
Stable Outcome

In an earlier article, we reported the results of a classroom experiment simulating price competition in an oligopoly with differentiated goods. That study raised some questions that we were unable to address at that time. For this current study, we have adapted the experiment to further explore the effects of scarcity in the input markets, and to study the effects of price controls in these markets. We find that scarcity in an input market has the expected directional effect on prices in both input and output markets, but not necessarily the magnitude expected; we further find that price controls have only some of the effects expected. In the current experiment, we increased the number of rounds of the game to allow more opportunity for convergence to a stable outcome, and to allow for three distinct phases of the game: initial rounds in which inputs were abundantly available, subsequent rounds in which one inputs supply was dramatically reduced, and final rounds in which a price floor was established on the one input which remained abundant. As expected, firms played Nash/Bertrand strategies in the early rounds. However, the shock caused by reducing the availability of capital took many rounds for full adjustment, with both output prices and the equilibrium rental rate of capital rising consistently and gradually toward their projected equilibria over ten rounds, although even then capital prices did not rise enough to absorb all firm profits. Surprisingly, establishing a minimum wage did not have the anticipated effect of balancing payments between labor and capital; instead, the minimum wage completely disrupted the trend of an increasing rental price of capital and reduced it to zero, while creating volatility in profits without consistently eliminating them. Overall, we find that most of our anticipated results ultimately obtain, but adjustments to variations in market conditions are neither immediate nor perfectly consistent with the predictions of theory.

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