Consider a market characterised by a downward sloping demand curve and a horizontal supply curve. Draw the demand and supply curves to indicate the predicted equilibrium price. If this market is implemented as a continuous double action as implemented by Vernon Smith, what do you think would be true of the transaction prices on average. Would they converge to the predicted equilibrium?

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The Answer of Consider a market characterised by a downward sloping demand curve and a horizontal supply curve. Draw the demand and supply curves to indicate the predicted equilibrium price. If this market is implemented as a continuous double action as implemented by Vernon Smith, what do you think would be true of the transaction prices on average. Would they converge to the predicted equilibrium?

Consider a Market Characterised by a Downward Sloping Demand Curve