Pearl Exchange- Demand and Supply Activity

The video tutorial introduces the Pearl Exchange, an activity designed to teach supply and demand concepts through interactive rounds. Students act as buyers and sellers, negotiating prices to understand consumer and producer surplus. The activity progresses through four rounds, each introducing different market scenarios, such as supply shocks and substitute effects, to illustrate equilibrium, shortages, and surpluses. The tutorial emphasizes the educational value of the activity, despite its simplifications compared to real-world markets, and encourages student engagement through dynamic classroom interactions.

What is the primary focus of the Pearl Exchange activity?

• Understanding consumer behavior

• Exploring demand, supply, and equilibrium

• Learning about international trade

• Studying government policies

In the Pearl Exchange activity, what do students learn about consumer and producer surplus?

• They are fixed values in any market

• They represent the benefits to buyers and sellers

• They are only important for sellers

• They are irrelevant in market transactions

What is the goal for each student in the Pearl Exchange activity?

• To avoid participating in negotiations

• To buy pearls at the lowest price

• To achieve the highest consumer and producer surplus

• To sell as many pearls as possible

How does the concept of equilibrium emerge in the Pearl Exchange activity?

• Through a single round of trading

• Through government intervention

• By repeating rounds and observing price convergence

• By setting fixed prices for all transactions

What happens in the activity when a mysterious virus affects the supply of oysters?

• A shortage occurs, raising prices

• The market remains unaffected

• The quantity supplied increases

• The price of pearls decreases

How does the fall in diamond prices affect the pearl market in the activity?

• It increases the demand for pearls

• It leads to a shortage of pearls

• It causes a surplus of pearls

• It has no effect on the pearl market

What is one of the key benefits of the Pearl Exchange activity according to the teacher?

• It engages students and illustrates market dynamics

• It simplifies complex economic theories

• It perfectly mirrors real-world markets

• It focuses solely on theoretical knowledge