Student Learning on a Multistage Market Simulation

Abstract

Simulations are widely used to teach economic principles and to provide students experience in decision making. This paper describes and evaluates a simulation exercise that helps students understand public policy impacts in a multistage market. Student teams of producers, marketers, and processors use information on costs and demand in negotiations to determine prices and quantities. Selected public policies such as marketing orders with price discrimination are implemented and analyzed. The simulation exercise improved student understanding of marketing orders and policy impacts on prices, quantities, and profits in a multistage market. Financial outcomes in the simulation were related to student learning as evidenced by exam scores.Developing effective instructional techniques to help students clearly understand public policy issues is both important and challenging. Techniques that place the responsibility for learning on students and engage them in the learning process can produce an enjoyable learning experience and enhance learning (Velenchik 1995). One such technique is economic simulation: student understanding of public policy issues can be improved by actively involving learners in simulated markets with regulations.The objective of this article is to report the development, implementation, and evaluation of a multistage market simulation exercise that is used to teach economic analysis of public policies. Student teams managing hypothetical firms make choices on technologies, prices, and quantities in a market that involves producers, marketers, and processors. Prices and quantities are determined through negotiations. Marketing orders with price discrimination and other government policies are simulated, and their impacts analyzed.The multistage market simulation involves several economic principles related to quantity and price determination, profit determination, price discrimination, and government policies. This study addresses several aspects of student learning related to these economic principles, Student survey questionnaires are used to describe perceived understanding of the concepts. Exam scores are related to the survey responses in order to compare