Market Experiment Results.3

Market Experiment Results.3 - quantity exchanged was 50 In...

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A seller with reservation price 3.25 was absent. 3 Buyers and sellers should be instructed to be willing to complete transactions at their 4 reservation price if they can do no better. reservation prices for sellers were {1.25, 1.50, 1.75, 2.00, 2.25, 2.50, 2.75, 3.00, 3.50, 3.75}. 3 The supply curve shifted up by $0.50 (or more at high end). Transactions again took place in quantity increments of 10. The supply and demand schedules intersect at a theoretical equilibrium price of $2.25 and quantity of 50. The price should rise $0.25 and quantity fall 10 relative to the first experiment. In all the first three rounds, the theoretically correct number of transactions were completed:
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Unformatted text preview: quantity exchanged was 50. In the fourth round, only 40 was exchanged, but the missing transaction was for the buyer with reservation price $2.25 to purchase from the seller with reservation price $2.25 (at a price of $2.25), which yields no surplus so did not generate any efficiency loss. The prices of each transaction in order of occurrence were: 4 Round 1 Round 2 Round 3 Round 4 2.30 2.15 2.24 2.30 2.50 2.00 2.35 2.25 2.30 2.25 2.20 2.20 2.10 2.30 2.20 2.25 2.15 2.20 2.30 Average 2.27 2.18 2.26 2.25...
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