Unit 2 → Subtopic 2.6
Finding Consumer Surplus in Everyday Shopping
Every time consumers make a purchase, they experience either a deal, a fair price, or overpayment depending on how much they were originally willing to pay for the product. The difference between a consumer's willingness to pay and the actual market price is called consumer surplus—an economic measure of the benefit consumers receive from transactions. This project challenges students to conduct an experiment where they analyze real-world examples of consumer surplus in their own shopping experiences.
Students will document real purchases by tracking items they or their peers buy over a period of time. They will ask participants how much they were willing to pay for a product versus how much they actually paid. By collecting multiple data points, students can calculate the average consumer surplus for different types of products, such as groceries, electronics, or entertainment services. They should also explore factors that influence consumer surplus, such as discounts, seasonal sales, or psychological pricing strategies.
To deepen their analysis, students should consider how market competition and pricing strategies impact surplus. For instance, when businesses engage in price wars, consumer surplus increases due to lower prices, whereas when demand is high (such as during holiday seasons or limited-time releases), surplus decreases as consumers are forced to pay more. Additionally, students should assess how different consumers value products differently—some may be willing to pay more for convenience, brand reputation, or personal preference, which affects surplus calculations.
The final experiment report will summarize collected data, surplus calculations, and real-world examples, connecting consumer surplus theory with everyday economic decisions. The goal of this project is to help students see how economic principles shape personal shopping habits and how businesses manipulate pricing strategies to capture more of the market's surplus.
Recommended Procedure:
Identify and Record Shopping Transactions – Document real purchases, noting how much consumers were willing to pay versus the actual price paid.
Calculate Consumer Surplus for Each Item – Subtract the actual price from the willingness to pay to determine the surplus for each purchase.
Analyze Factors Affecting Surplus – Explore how sales, demand fluctuations, and psychological pricing impact consumer surplus across different industries.
Compare Different Consumer Surplus Patterns – Determine whether certain types of products tend to generate higher or lower surplus for consumers.
Write an Experiment Report on Consumer Surplus – Present findings in a structured report, illustrating how economic theory plays out in real shopping behaviors.
Suggested Sources:
Understanding Consumer Surplus:
Investopedia: Consumer Surplus Explained – https://www.investopedia.com
Khan Academy: Surplus and Market Efficiency – https://www.khanacademy.org
2. Pricing Strategies and Consumer Behavior:
Harvard Business Review: The Psychology Behind Pricing – https://hbr.org
The Balance: How Discounts and Sales Affect Consumer Surplus – https://www.thebalancemoney.com
3. Case Studies on Consumer Spending:
Nielsen Reports: How Consumers React to Prices – https://www.nielsen.com
Pew Research Center: Trends in Consumer Spending – https://www.pewresearch.org
4. Data Collection and Experiment Tools:
Google Sheets or Excel for organizing transaction data
Online survey tools like Google Forms for collecting responses from different consumers
Grading Rubric:
Total Points: __ /20
