In this lesson you will participate in a trading game. The game is designed to demonstrate that when voluntary trade takes place, both parties benefit. Voluntary trade allows individuals to obtain the goods and services they desire and for societies to specialize in the production of those goods and services they are most efficient at producing. Other gains to trade in the presence of such trade implies competition. This means there is a greater variety of products at lower prices for consumers. As a nation, the United States engages in fairly high degree of trade with other nations, as indicated in this list of Top Fifteen Countries with which the U.S. Trades . This lesson will encourage you to examine actual trade patterns between the U.S. and its trading partners.
In this lesson you will take part in a trading game. You will learn about trade and why countries participate in it as well as understanding what one can gain from trade and that in a voluntary transaction both parties can gain.
You are going to play a game to try and demonstrate this phenomenon that economists call "gains from trade". Follow these steps to play the game:
1. Your teacher will put your class into groups of 8-10 students and have these groups of students sit together.
2. You will use this attached gift certificate file for this lesson.
3. Round 1: Review your gift certificate. Play the game as if they are real and could be spent. Next, rate your certificate from 1-10 (1=little value; 10=very valuable), on how much you value the certificate you've been given.
4. Your teacher will write all of the rankings on the board by student group and add them up to find a total score. The class will spend a few minutes discussing why students rated their certificates as they did. This will allow you to get a feel for all of the certificates that are out there and available.
5. Round 2 ("U.S. Trade"): Now you have 5 minutes to trade your certificate with others within your group.
6. Once the trading is done, again rate how much you value your current certificate. The total will again be added up by group.
7. The class will have a discussion about why the number increased. Why did you make your trade?
8. Round 3 ("World Trade"): Lastly, the class will play the game one more time but you have 5 minutes to trade with anyone in the classroom. Again, rate your certificate value.
This lesson has demonstrated the following: when voluntary exchange or trade takes place both parties benefit. The game provided a nice simulation of real life. When the certificates were first handed out you had a certain level of value similar to what people might have in a society without the ability to trade with their neighbors. The second activity, where you traded within your group, might be like trade among states in the U.S. The third activity, when you traded within the entire class, could represent open trade with the rest of the world. Countries that trade with the entire world are wealthier and their citizens have a higher level of satisfaction because of the gains they realize from trade.
Essay: Write a short journal entry about your experience with the trading game. Explain what certificate you were originally given, what trades you made and why you made these trades. Conclude whether or not your level of satisfaction was increased or decreased due to trade in the game.
This notepad can be used to record and print the question.
1. What do economists mean when they talk about the "gains from trade"?
Go to the U.S. Census Bureau's website and research how the major U.S. tradie partners changed over the last decade. Then list some of the major U.S. exports and imports from other countries.
What goods do we import and what goods do we export?