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Pearl Exchange

This document describes a classroom activity where students will participate in a simulated pearl exchange market. Over the course of four trading rounds, half of the students will be buyers and half will be sellers, with the goal of maximizing their profits. Buyers aim to purchase pearls for less than their maximum price, while sellers aim to sell for more than their minimum. Supply and demand shifts will occur between rounds to illustrate how market prices are impacted.

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Mara Ramos
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723 views

Pearl Exchange

This document describes a classroom activity where students will participate in a simulated pearl exchange market. Over the course of four trading rounds, half of the students will be buyers and half will be sellers, with the goal of maximizing their profits. Buyers aim to purchase pearls for less than their maximum price, while sellers aim to sell for more than their minimum. Supply and demand shifts will occur between rounds to illustrate how market prices are impacted.

Uploaded by

Mara Ramos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name: _____________________________________________ Date: _______ Period: ________

The Pearl Exchange Activity


Pearls from the island of Bali are valued all over the world. Buyers and sellers meet weekly at
the pearl exchange here in room 101. During the 4 minute long trading session, half the class
will be buyers the other half will be sellers. Your goal is to make as much surplus (profit) by
negotiating a favorable price.

 The buyer must try to buy pearls as cheaply as they can; if they pay less than their
maximum price then they get a consumer surplus.
 Sellers must try to sell their product for as much as they can, if they sell above the minimum
price they get a seller’s surplus.

There will be four trading sessions and you can only sell/buy once per session. When you make
a deal shake hands and go tell Mr. Taylor your selling price to record on the front board. Then
record the information for selling/ buying on your worksheet at your desk. Don’t tell people
what your max or minimum price was until after we talk about the round. If you don’t make a
sale, or buy a product that round, your maximum or minimum price becomes a negative
amount!
How to calculate a buyer’s surplus:
buyer surplus (profit) = buyer’s max price – sold price
How to calculate a seller’s surplus:
seller’s surplus (profit) = sold price – seller’s minimum price

Max/Minimum price Buying/Selling Price Surplus


Round 1

Round 2

Round 3

Round 4

Total Surplus:

Round 1:

1. What was the Equilibrium price (average) for pearls?


Round 2 Reflection:

2. What was the Equilibrium price (average) for pearls?

3. Why do you think this changed?

Round 3: In this round, a mysterious virus kills many oysters.

1. Who were the ones competing against each other in this round? How did this affect the price?

2. Did supply or demand shift? What was the factor that caused it
to shift? (look back at your notes).

3. Show on the following on the graph to the right:


a. Which way the curve would shift
b. Where the new equilibrium price would be
c. Where the shortage is

Round 4 Reflection: The price of diamonds (a substitute) decreases.

4. Who was competing against each other in this round? How did this affect the price?

5. Did supply or demand shift? What was the factor that caused it
to shift? (look back at your notes).

6. Show on the following on the graph to the right:


a. Which way the curve would shift
b. Where the new equilibrium price would be
c. Where the surplus is

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