- Teach students about price elasticity of demand
- Have the students connect responsiveness of rubber bands to responsiveness of quantity demand to a price change
- Make the lecture memorable to increase retention
Students often struggle to fully understand the concept of elasticity within the realm of economics. However, they come to class with the knowledge of what “elastic” means. They encounter this concept within their everyday lives with items such as rubber bands, hair bands, and resistance bands at the gym. To expand upon this knowledge a classroom activity was developed to link the economic use of the word elasticity to this everyday usage. This activity utilizes different types of rubber bands in order to solidify the concept of elastic and inelastic goods with respect to demand.
Start the lesson showing the clip The High Price of Insulin. Ask the students why the guy was willing to kiss Amy? Ask the students to relate it back to the supply and demand chapter.
The following activity will try and drive home the idea of responsiveness when it comes to price elasticity of demand. Each student, or groups of students, will receive different types of rubber bands that illustrate different levels of elasticity. The students will then relate goods and services that have different levels of elasticity to these rubber bands.
In order to complete this activity, each student (or group of students) who is participating needs two different types of rubber bands. One band needs to be more elastic than the other. The bigger the contrast in elasticity the better the activity works. I use one rubber band size 64 and one size 84. A link to purchase these rubber bands can be found in the shopping list to the right.
In addition, I provide my students with fine-point Sharpie markers that they return at the end of class. This is optional as students can write on the rubber bands with pen but it is easier to write with, and easier to see, Sharpie ink.
The activity takes approximately fifteen minutes of class time, including the non-mathematical introduction of elasticity and price elasticity of demand. If there are time constraints, it is possible to have students complete this activity outside of class and bring in the finished product for discussion.
A standard package of rubber bands at an office supply store will cost the instructor around ten dollars and provide about four-hundred bands. Sharpie fine point permanent markers will cost around fifty cents apieceper pen. In a large class it is suggested to have students use their own pens to cut down on the cost of materials.minimize cost.
At the start of class, students are instructed to grab one of each type of rubber band and a fine-tip Sharpie. For larger classes, it is suggested to utilize teaching assistants to pass out the materials as students arrive. The instructor should introduce elasticity in a broad way relating the idea to the responsiveness of rubber bands. It is also useful to encourage students to pull on the rubber bands to “feel” what elasticity is. The instructor should also emphasize that the two rubber bands respond differently to the same “pull” with their hands. As the students are stretching the rubber bands, the instructor should highlight that the rubber band that stretches further has a larger response to the pulling and is considered elastic. The rubber band that stretches less has a smaller response and is considered inelastic. These are terms and ideas that the majority of the students already understand.
Once the students have explored the elasticity of each rubber band it is important to define the price elasticity of demand for students. Indicate that one reason economists are interested in how consumers respond to a price change is because it affects revenues. This can be illustrated with the following real-world example: If a business owner is attempting to raise company revenues by increasing the price of the product, she does not want consumers to have a big response (she wants an inelastic product), because losing customers takes away from the revenues gained from the price increase. However, when she decreases the price of the product she wants consumers to have a big response (she wants an elastic product) to gain enough customers to offset the loss in revenue from the price decrease. Following this example, the instructor should urge students to stretch the “elastic band” when talking about elastic goods and stretch the “inelastic band” when talking about inelastic goods. This employs students’ kinesthetic abilities which they can utilize to trigger memories of the topic later.
After the basic lecture of what price elasticity of demand is, instruct students to pair up or create small groups to discuss what types of goods they think would be classified as elastic goods and inelastic goods with respect to demand. Instruct them to write the elastic goods on the more elastic rubber band and write the inelastic goods on the more inelastic band. If time permits, encourage some of the groups to give examples of the goods and services they wrote down and discuss other examples.
At the end of class the instructor can either collect the rubber bands or allow students to keep them. Collecting the rubber bands allows the instructor to have some noteworthy materials for their office to show future students and colleagues. Allowing students to keep the rubber bands may help them relate back to elasticity as they study for future exams. In my courses, I give students a choice and approximately 75% of them choose to keep the rubber bands.
When I first started conducting classroom activities I was concerned that students may think they were childish. However, I quickly learned if students see the added value they respond well and enjoy the break from traditional lecture. I set expectations early in the semester and students understand if examples and activities are not handled professionally and seriously then they will not be conducted and traditional lectures will resume. Curwin, Mendler and Mendler (2008) discuss at length on how to meaningfully include students in setting classroom expectations.
The only issue I have encountered while implementing this particular activity relates to the examples students use. Some examples are related to sex, drugs, and alcohol which can be distracting to the class as a whole if not handled correctly. Depending on the way the instructor conducts the classroom he or she will want to address these examples differently. Geerling, Coppock, Holder, and Tierney (2014) briefly discuss using sex and drugs as classroom examples in Tip #XVI in The Ultimate Guide to Teaching Macroeconomics.
Curwin, R.L., Mendler, A.N., and Mendler, B.D. (2008). Discipline with dignity: New challenges, new solutions. ASCD.
Geerling, W., Coppock, L., Holder, K., and Tierney, J.E. (2014). “The Ultimate Guide to Teaching Macroeconomics”, W.W. Norton & Company: New York.