Economics Case Studies

Scarcity and Economics

Case Study #1- Read the scenario and use only the information below to complete the following.
It’s your last year of high school and you have been asked to organize the annual senior party that takes place in
your school’s gym. Last year, the price was $15 per person and 460 students attended. You plan to charge the
same price this year and expect the same number of students to show up. Below is the cost of different booths that
you can have at the party. The ones with an asterisk (*) are larger and require 20% of the area in the gym. The
other booths are smaller and require only 5% of the gym. It’s your job to pick which booths to have at the party.
Casino* $4000 Full buffet* $5000 Laser tag* $1000 Sumo wrestling* $500
Climbing wall $2000 Giant slide* $500 Magician* $1500 Taco bar $2000
DJ/Music* $3000 Henna tattoos $200 Sandwich bar $800 VR games* $500
Face paint $200 Hypnotist* $1500 Soda fountain $200 Water coolers $100
1. How much can you spend on booths? Explain how you got your answer.

I can spend no more than 6,900 dollars. I based this number on the previous rate of the party (15 per person at 460
people).

2. Why is it a bad idea to only have laser tag at the party?

It’s only one booth and takes up 20% of the gym. It also takes up 14% of the budget (if we base it on the 15 per
person at 460 people.

3. Give two reasons why you can’t have all of the booths at the party?

There is not enough space for all the booths. We would also have to raise the price making it inaccessible to some
groups of people.

4. List the booths that you would choose to have at the party and rank them in order of importance.

1. Music
2. Laser tag
3. Full buffet
4. Soda fountain
5. Henna
 6. VR
7. Water coolers

5. Identify two booths that you did not choose. Explain why you excluded them from the party.

I excluded the casino and sumo wrestling because these are the two booths I projected being least desired by the
students.

6. Your principal just told you that you can use a large area outside the gym for the party. How will this new information
affect which booths you choose?

I’d be able to choose more of the booths that take up more space.

7. You realize that you can buy all the booths if you charge $50 per person and all 460 students attend the party. What
is the potential downside of charging $50 per person instead of $15?

Less people will be in attendance.

8. Other than the price and size of a booth, what else would influence your decision to pick one booth over another?

The amount of people who would potentially go to the booth.

9. Why is it unlikely that everyone at the party will be happy with the booths that you choose?

Everyone has varying opinions, and something that is fun for one person, may not be enjoyable for someone else.