Question 1 Demand & Supply Session 1 {2 point} Assume that in session 1 of the experiment that was run during the tutorial, the allocation of Buyers and Sellers (including the Seller Costs and the Buyer Value) was as follows: Seller Costs Number in market Buyer value ~ Number in market S10 10 $40 15 $30 15 $20 15 On thebasis of this information, draw the demand curve and the supply curve for the good in session 1. (tip: determine for each price how much of the good is demanded and supplied, depending on the various sorts of buyers and sellers in the market). Question 2 Theoretical Predictions versus Results Session 1 {3 points} Assume that session 1 of experiment 1 the following transactions were realized: Transaction# Price ($) Seller Costs ($) Buyer value ($) 1 30 10 40 35 30 40 3 18 10 20 4 32 30 40 5 30 10 40 6 32 30 40 7 34 30 40 8 31 10 40 9 35 30 40 10 14 10 20 11 34 10 40 12 32 30 40 13 28 10 40 14 25 10 40 15 35 10 40 16 19 10 20 On the basis of this information (questions 1 and 2), fill in this table: Average price Number of transactions Theoretical prediction Results experiment question 1 question 2 Number of sellers that sell per type Low cost ($10): Low cost ($10): type. High cost ($30): High cost (30): Low value ($20): High value ($40): Number of buyers that buy per type. Consumer surplus Producer surplus 100% Market Efficiency . *Defined as actual profit of participants in the markets as percentage of the maximum possible profit. Question 3 Demand & Supply Session 2 {2 points} Assume that in session 2 of the experiment that was run during the tutorial, the allocation of Buyers and Sellers (including the Seller Costs and the Buyer Value) was as follows: Seller Costs Number in market Buyer value ~ Number in market $10 20 $40 15 $30 3 $20 15 On the basis of this information, draw the demand curve and the supply curve for the good in session 2. (tip: determine for each price how much of the good is demanded and supplied, depending on the various sorts of buyers and sellers in the market). Question 4 Theoretical Predictions versus Results Session 2 {3 point} Assume that session 2 of experiment 1 the following transactions were realized: Deal # Price ($) Seller Cost ($) Buyer Value ($) 1 13 10 20 2 17 10 20 3 33 30 40 4 12 10 20 5 38 30 40 6 18 10 20 7 15 10 40 8 31 10 40 9 22 10 40 10 14 10 20 11 34 30 40 12 15 10 20 13 12 10 20 14 38 30 40 15 12 10 20 16 22 10 40 17 14 10 20 18 26 10 40 On the basis of this information (questions 3 and 42), fill in this table: Theoretical prediction Results experiment (question 3) (question 4) Average price Number of sellers that sell per type Low cost (10): Low cost (10): type. High cost ($30): High cost ($30): Low value ($20): Low value ($20): High value (540): High value ($40): Number of buyers that buy per type. Consumer surplus 100% Market Efficiency* *Defined as actual profit of participants in the markets as percentage of the maximum possible profit. Question 5 Conclusions from the experiment {2 points} On the basis of the results of the experiment, would you say that the demand and supply model introduced in lecture 1 is an adequate model for describing the behavior of agents in a competitive market? Briefly explain why (not). Question 6 Theory {2 points} Assume that the competitive market for bicycles in Pedal City is described by the demand curve P = 1800 2Q, and the supply curve P = 4Q. a) If the price for bicycles is 800, how many bicycles will be demanded and supplied? Is the market in equilibrium? Explain! b) Calculate the equilibrium price and quantity of bicycles. Due to a change in consumer preferences the demand for bicycles increases. The new demand function is P = 2400 - 2Q. ) Determine the new equilibrium price and quantity in the market for bicycles