A Classroom Market for Cocoa

Every day in communities all around the country, decisions are made on what goods and services will be produced, how much of each will be produced, and who will get to consume them. How are these decisions made?

A market economy has no central planners to answer these basic economic questions. Instead, the prices and quanti-ties for goods and services are established through the interaction of buyers (consumers) and sellers (producers) in markets.

Producers decide which goods and services to produce by considering how much consumers are willing and able to pay for various products. Producers will be successful and earn profits as long as they can sell their product for more than the average cost of producing it. Consumers will be successful and satisfied if they are able to buy the goods and ser-vices they want for less than they are willing and able to pay for them.

These two groups come together to negotiate a price that, in turn, determines the quantity of product that producers are willing and able to sell and buyers are willing and able to purchase. This determines how much of society’s scarce resources will be allocated to the production of that product and answers two fundamen-tal economic questions: (1) How many units of each good or service will be produced? and (2) Who will produce the units?

Description:  In this lesson,  students participate as buyers and sellers in a classroom market for cocoa. They are encouraged to pursue their own self-interest as they negotiate with other students to achieve the best price for cocoa. Through this exercise, they gain an understanding of the incentives of buyers and sellers and how prices for goods and services are determined in markets. They also learn how they could have predicted the market-clearing (or equilib-rium) price using demand and supply curves.

Compelling Question:  How does the interaction of buyers and sellers in a market determine the price of a good?

Concepts: Supply, demand, surplus, shortage, market-clearing (or equilibrium) price, equilibrium quantity

Time Required: 75 mins total, but can be broken down into two sessions: 45 mins on the first day and 30 minutes on the second day.

Lesson Plan:  The lesson, ppt slides, and handouts are attached in the Resources section

Market for Cocoa CEE lesson

Market for Cocoa slides

Market for Cocoa print activities