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This exercise introduces students to the concept of a demand curve, and helps them understand how demand curves are derived. During the exercise students think about and submit the price they are willing to pay for a specific item. These prices are used to generate a demand curve. In particular, to generate the prices, the instructor auctions off three M&M packets to the highest bidders via a sealed-bid auction. The instructor enters the bids into the EconPort graphing software (see below). The data generated by the class forms a demand curve which motivates the class's introduction to demand curves.

Students often have trouble understanding that demand curves are visualizations of marginal benefits. Even when they have such an understanding, they often do not see the logic of ordering these values from highest to lowest for demand curves. This experiment helps students to grasp these concepts more readily. It also prepares students for studying (and participating in experiments about) competitive equilibrium theory and other market characteristics (e.g., taxes, price controls).

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