Market Experiments Part 1 Q1. In the case of bureaucrats with true information, What is the average deal price & price range, and how many deals can be made? UESUGI Takamasa Information Sellers’ Purchase Costs (thousands) 1 2 3 4 5 6 7 56 60 64 71 76 82 90 Buyers’ Price Limits (MWTP) (thousands) 1 2 3 4 5 6 7 105 96 92 85 80 73 68 How to Find Average Deal Price Average deal price (ADP) is equal to the price where demand meets supply (Equilibrium point) To find ADP, Derive demand & supply functions Find the equilibrium point where those two functions intersect Demand-Supply Curve P 120 100 80 Supply 60 Demand 40 20 0 1 2 3 4 5 6 7 Q Linear Demand-Supply Curve P (thousands) P = 5.6429Q + 48.714 P = -6.0357Q + 109.71 120 100 80 P*=78.18623 Supply 60 Demand 40 20 0 1 2 3 4 5 6 Q*=5.222886 7 Q Answer Price Range (according to the graph) = 76,000~80,000 Average deal price = 78,186.23 5 deals can be made = 2 sellers & 2 buyers are going to be excluded from the market
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