Consider two markets: One with demand and supply curves that are relatively steep and the second with demand and supply curves that are relatively flat but each with the same predicted equilibrium price. Draw two diagrams with the first market above on the left and the second on the right. What would Walras predict about the speed of convergence of transaction prices to the predicted equilibrium price in each of these two markets? Do the findings reported by Vernon Smith bear out the Walrasian conjecture? What does Smith identify as the major prediction about the degree and speed of convergence of transaction prices to the predicted market equilibrium price?

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The Answer of Consider two markets: One with demand and supply curves that are relatively steep and the second with demand and supply curves that are relatively flat but each with the same predicted equilibrium price. Draw two diagrams with the first market above on the left and the second on the right. What would Walras predict about the speed of convergence of transaction prices to the predicted equilibrium price in each of these two markets? Do the findings reported by Vernon Smith bear out the Walrasian conjecture? What does Smith identify as the major prediction about the degree and speed of convergence of transaction prices to the predicted market equilibrium price?

Consider Two Markets: One with Demand and Supply Curves That