PARTNERS

ECON
CHAPTER 5
FAD ACTIVITY
INTRODUCTION
In 1958, Wham-O, Inc. began marketing the Hula Hoop in the United States. Sales of the Hula Hoops sky-rocketed during
the year, in the first months over 25 million were sold, within the year over 100 million. Similarly today, Silly Bandz has
taken off in sales since the summer of 2008. According to Robert J. Croak, founder of Brainchild Product the producer of
Silly Bandz, from a small warehouse in Toledo, Ohio has gone from shipping 20 to 1,500 boxes a day.

In 1994, the film The Hudsucker Proxy portrays a fictionalized account of the demand for Hula Hoops as they were
introduced into the market.

Watch this clip from The Hudsucker Proxy and discuss with your partner, how the supply and demand for Hula Hoops
interacted with prices.
www.youtube.com/watch?v=Ng3XHPdexNM

#1. DESCRIBE WHAT HAPPENED TO PRICES AND WHAT CAUSED IT TO HAPPEN AS THE HULA HOOP GAINED
POPULARITY. (Use complete sentences in the text box below)

ANSWER:

Today, Brainchild Products, the producers of Silly Bandz are experiencing a large increase in demand for their products
similar to that of Hula Hoops in 1958. The rise in demand for Silly Bandz; however, has not been accompanied by an
increase in the price for the product.

In order to gain some background information about the demand for Silly Bandz, take a look at the following news stories
from ABC and USA Today.
http://abcnews.go.com/Nightline/video/silly-bandz-latest-fad-11686769http://abcnews.go.com/Nightline/video/silly-bandzlatest-fad-11686769
www.usatoday.com/money/smallbusiness/2010-07-01-sillybandz01_CV_N.htm

LIST ONE IMPORTANT FACT FROM EACH VIDEO RELATED TO EITHER SUPPLY, DEMAND, OR PRICING IN THE
TEXT BOXES BELOW:

VIDEO 1:

VIDEO 2:

VIDEO 3:

WHY?
In this lesson, you will use the case studies of Hula Hoops and Silly Bandz to learn about the concepts of supply, demand,
price, equilibrium, surplus, and shortage. You will be defining many concepts of supply and demand, surplus, shortage,
and equilibrium. You will also draw, label, and analyze many parts of graphs to (1) help you better understand the
concepts and (2) in order to demonstrate your knowledge. You will also analyze a case study and use a graph that
identifies the given price of Silly Bandz, and explains why the price is an example of either a shortage, surplus, or
equilibrium price.
PROCESS
1. Review the concepts of the "Law of Supply" and the "Law of Demand.":
THE LAW OF SUPPLY STATES:

ANSWER:

THE LAW OF DEMAND STATES:

ANSWER:

2. REVIEW THE CONCEPTS OF AND DEFINE:

EQUILIBRIUM PRICE:

SURPLUS:

THIS GENERALLY HAPPENS WHEN:

SHORTAGE:

THIS GENERALLY HAPPENS BECAUSE:

3. Use the Supply and Demand Part II section on supply and demand to review the two concepts. (hit the full
screen button in order to see them more clearly, it is located at the top right-hand side next to the go to lesson
link. It might not be fully in view. To navigate the slides a white arrow will appear in the corner. Have students click
on the arrow, as it appears to move on to the next slide.)

The tutorial gives graphic examples that show you the interaction between quantities supplied and demanded at
different prices. It then walks you through the concepts of equilibrium, surplus, and shortage, give graphic
examples for each. Finally, you can use the tutorial to see how increases or decreases in supply/demand are
graphed, and their impact on prices and quantities supplied or demanded.

4. From the information presented in the video clip from the Hudsucker Proxy and the Hula Hoop Case Study can be
used to examine the changes in demand shown in the video. You are walked through three different supply and
demand schedules and shown graphically how the demand curve for Hula Hoops changed from the introduction
of the Hula Hoops into the marketplace to the height of their popularity in 1958.

5. Using your knowledge of the laws of supply and demand and the Hula Hoops Case Study, go through the news
article and video clip on the market for Silly Bandz. Then use the Silly Bandz Case Study to examine whether the
current price of $5, for a package of Silly Bandz represents an equilibrium price.

IF THE CURRENT PRICE REPRESENTS THE EQUILIBRIUM PRICE, EXPLAIN HOW BELOW. IF NOT,
WHAT MIGHT THE PRICE BE IN THE FUTURE GIVE A CONTINUED INCREASE IN DEMAND? HOW DID
YOU COME TO THIS CONCLUSION?

ANSWER:

CONCLUSION
The laws of supply and demand can be used to show the relationship between producers and consumers. Prices are
used in the market to help producers and consumers communicate with one another.
The value-scales of producers and consumers are coordinated through the price system. If the supply of a product
matches the demand for the product, the price is said to be at equilibrium and the quantity supplied will match the quantity
demanded.
If the price of a product is too high, supply will exceed the demand and there will be a surplus of goods or services. If the
price of a product is too low, demand will exceed supply and there will be a shortage of goods or services.
HOW DO THE CASE STUDIES FOR HULA HOPS AND SILLY BANDZ EXEMPLIFY HOW CHANGES IN DEMAND
FOR CONSUMER PRODUCTS CAN SHIFT TREMENDOUSLY OVER SHORT PERIODS?

ANSWER:

TODAY, WE HAVE SEEN A SIMILAR RISE IN DEMAND FOR SILLY BANDZ; HOWEVER THE PRICE LEVEL FOR
SILLY BANDZ HAS NOT RISEN. FROM WHAT YOU HAVE STUDIED, WHY DO YOU THINK THAT IS?

ANSWER:

FROM THE MATERIAL COVERED, WHAT IMPACT DO YOU FEEL THAT SUBSTITUTE BAND BRANDS ENTERING
THE MARKET HAVE HAD ON IT?

ANSWER:

WHY DO YOU FEEL SUBSTITUTE BANDS EVEN IN THE MARKET?

ANSWER:

LIST AT LEAST THREE NEW THINGS THAT YOU AND YOUR PARTNER LEARNED FROM THIS ACTIVITY
CONCERNING, SUPPLY, DEMAND, EQUILIBRIUM, AND/OR FADS (Use complete sentences)

ANSWER: