The Apple Market Debrief

1. At what price were apples most frequently sold in round Three?

2. When did the spread in price begin to decrease?

3.Why did the prices become more concentrated, (a smaller spread in price)?

4. Why did the high profit makers have success?

5.Did the people who experienced losses have an incentive to continue participating?

6 (a) who were the sellers competing against in the exercise? (b) who were the buyers competing against in the exercise? (c) who were the price takers in the exercise?

What is a market? It’s an interaction of buyers and sellers Necessary components for a market –Buyers –Sellers –A product –Incentives –Information Rules of the game Property Rights

Creating a schedule for demand What was the highest price that someone was willing and able to buy at?

Creating a schedule for demand Assuming they were offered a lower price at which to buy, would they have taken it?

Creating a schedule for demand; starting with the highest price, as you decline in price, include the previous buyers PRICEQUANTITY DEMANDED $

Creating a schedule for supply What was the lowest price that someone was willing and able to sell at?

Creating a schedule for supply Assuming they were offered a higher price at which to sell, would they have taken it?

Creating a schedule for supply; starting with the lowest price, as you rise in price, include the previous sellers QUANTITY SUPPLIED PRICEQUANTITY DEMANDED $

Of all the prices in the chart below, at which price does something unique happen? QUANTITY SUPPLIED PRICEQUANTITY DEMANDED $

Why would you call this equilibrium price, the market clearing price?

From this point on, in this course, you will never be allowed to say, “Supply doesn’t meet demand” or “Demand is greater than supply”