Vernon Smith's Experimental Results Supporting Competitive Equilibrium (Figure 8.6)

Step-Function Demand Curve for Supporters

Consider a market for a specific used item with a small number of potential buyers and sellers. The maximum prices the five potential buyers are willing to pay are: $40, $35, $30, $25, and $20. The minimum prices the five potential sellers are willing to accept are: $15, $20, $25, $30, and $35. Assuming any buyer can trade with any seller, what is the maximum number of items that can be traded in this market?

A map of Karim's preferences shows his indifference curves for different combinations of daily free time and consumption. Points A (15 hours free time, $84 consumption), C (16 hours, $70), and D (17 hours, $60) all lie on the same indifference curve, IC₁. Point B (20 hours, $50) lies on a lower indifference curve, IC₀. Point E (18 hours, $75) lies on a higher indifference curve, IC₂. Based on this information, which of the following statements is true?

Market Demand with Discrete Buyers

In a small market for a particular collectible card, there are five potential buyers. Their individual maximum willingness to pay for the card is: $25, $22, $18, $18, and $12. If the market price for this card is set at $20, what is the total revenue generated from these five buyers?

A small, local market for a handmade good has four potential buyers and four potential sellers. The maximum prices the buyers are willing to pay are $12, $10, $8, and $5. The minimum prices the sellers are willing to accept are $4, $6, $9, and $11. For a transaction to occur, a buyer's willingness to pay must be at least as high as a seller's minimum acceptable price. Which of the following prices could be a price at which this market is in equilibrium (i.e., the quantity demanded equals the quantity supplied)?

Consider the following payoff matrix for two countries, A and B, deciding on their environmental policy. The payoffs represent economic benefits, where a higher number is better. Without communication, the equilibrium outcome is for both countries to choose the 'High Pollution' strategy, resulting in a payoff of (2, 2) for (Country A, Country B).

Payoff Matrix:

If the two countries are able to negotiate and form a binding agreement, which outcome are they most likely to achieve together?

The demand for a rare collectible in a small market is represented by a step-function. There are five potential buyers with the following maximum willingness to pay: Buyer 1 ($90), Buyer 2 ($80), Buyer 3 ($70), Buyer 4 ($60), and Buyer 5 ($50). If the market price for the collectible is set at $55, what is the total consumer surplus generated in this market?

In a small market for a specific type of concert ticket, there are four potential buyers with maximum willingness to pay of $60, $50, $45, and $30. There are also four potential sellers with minimum acceptable prices of $25, $35, $48, and $55. If the current market price for a ticket is set at $40, what is the state of the market?

Characterizing a Discrete Market

You are constructing a demand curve for a used textbook in a market with four potential buyers. Their maximum willingness to pay is as follows: Ana ($30), Ben ($50), Chloe ($20), and David ($40). Arrange the buyers in the correct sequence as they would appear from left to right on a step-function demand curve, starting with the buyer who is willing to pay the most.