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I need help with question 5,6 and 7. I have attached the data set needed to answer these questions. Thanks

Round 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 ID Unit Value Position Shop PrioCost Price…

I need help with question 5,6 and 7. I have attached the data set needed to answer these questions.
Thanks 

Attachment 1

Attachment 2

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Round
ID Unit Value
PosiTon
Shop PrioCost
Price
Grade
Other ID Other UEarnings
1
1
1
13.6
11 13^15^21*.**
13
3
21
1
0.6
1
2
1
8.8
2 15^13^16*.**
6
2
15
1
2.8
1
3
1
8.8
9 15^13^18*.**
8
2
18
1
0.8
1
4
1
4
4 14^15^16*.**
6.99
1
14
1
-2.99
1
5
1
8.8
1 15^13^16*.**
6
2
15
1
2.8
1
6
1
4
7 15^17^19*.**
4
1
17
1
0
1
7
1
4
8 13^15^19*.**
4
1
19
1
0
1
8
1
8.8
12 15^13^16*.**
8
2
18
1
0.8
1
9
1
13.6
3 13^16^19*.**
12
3
13
1
1.6
1 10
1
8.8
6 13^16^r^*.**
8
2
16
1
0.8
1 11
1
13.6
5 15^13^16*.**
12
3
13
1
1.6
1 12
1
8.8
10 15^16^18*.**
8
2
16
1
0.8
1 13
2 *.**
*
**
11.8
12
3
11
2
0.2
1 13
1 *.**
*
**
10.8
12
3
9
2
1.2
1 14
1 *.**
*
**
1.4
6.99
1
4
2
5.59
1 15
2 *.**
*
**
5.6
6
2
2
2
0.4
1 15
1 *.**
*
**
4.6
6
2
5
2
1.4
1 16
2 *.**
*
**
5.6
8
2
12
2
2.4
1 16
1 *.**
*
**
4.6
8
2
10
2
3.4
1 17
1 *.**
*
**
1.4
4
1
6
2
2.6
1 18
2 *.**
*
**
5.6
8
2
8
2
2.4
1 18
1 *.**
*
**
4.6
8
2
3
2
3.4
1 19
1 *.**
*
**
1.4
4
1
7
2
2.6
1 21
1 *.**
*
**
10.8
13
3
1
2
2.2
2
1
1
13.6
10 15^18^21*.**
13
3
21
1
0.6
2
2
1
13.6
11 15^18^21*.**
13
3
21
1
0.6
2
3
1
8.8
8 15^18^21*.**
8
2
18
1
0.8
2
4
1
4
9 13^19^20*.**
4
1
19
1
0
2
5
1
8.8
4 15^18^13*.**
5.9
2
15
1
2.9
2
6
1
4
3 13^15^21*.**
3.5
1
13
1
0.5
2
7
1
4
5 14^13^r^*.**
5.99
1
14
1
-1.99
2
8
1
8.8
2 15^18^21*.**
5.9
2
15
1
2.9
2
9
1
4
1 13^21^15*.**
3.5
1
13
1
0.5
2 10
1
4
6 14^15^20*.**
5.99
1
14
1
-1.99
2 11
1
8.8
7 15^18^21*.**
8
2
18
1
0.8
2 12
1
13.6
12 15^13^18*.**
13.97
3
16
1
-0.37
2 13
2 *.**
*
**
2.4
3.5
1
6
2
1.1
2 13
1 *.**
*
**
1.4
3.5
1
9
2
2.1
2 14
2 *.**
*
**
2.4
5.99
1
10
2
3.59
2 14
1 *.**
*
**
1.4
5.99
1
7
2
4.59
2 15
2 *.**
*
**
5.6
5.9
2
5
2
0.3
2 15
1 *.**
*
**
4.6
5.9
2
8
2
1.3
2 16
1 *.**
*
**
10.8
13.97
3
12
2
3.17
2 18
2 *.**
*
**
5.6
8
2
3
2
2.4
2 18
1 *.**
*
**
4.6
8
2
11
2
3.4
2 19
1 *.**
*
**
1.4
4
1
4
2
2.6
2 21
2 *.**
*
**
11.8
13
3
2
2
1.2
2 21
1 *.**
*
**
10.8
13
3
1
2
2.2
3
1
1 *.**
11 17^15^21*.**
*.**
*
*
*
0

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3
2
1
13.6
7 17^15^21*.**
13
3
21
1
0.6
3
3
1
8.8
5 17^15^21*.**
7.5
2
17
1
1.3
3
4
1
4
4 16^20^15*.**
3.91
1
16
1
0.09
3
5
1
4
3 15^17^21*.**
3.2
1
15
1
0.8
3
6
1
4
1 15^17^16*.**
3.2
1
15
1
0.8
3
7
1
8.8
2 17^15^16*.**
7.5
2
17
1
1.3
3
8
1 *.**
8 17^15^21*.**
*.**
*
*
*
0
3
9
1 *.**
10 15^17^21*.**
*.**
*
*
*
0
3 10
1 *.**
9 17^21^r^*.**
*.**
*
*
*
0
3 11
1
13.6
6 17^15^21*.**
13
3
21
1
0.6
3 12
1
4
12 15^16^17*.**
4
1
19
1
0
3 15
2 *.**
*
**
2.4
3.2
1
5
2
0.8
3 15
1 *.**
*
**
1.4
3.2
1
6
2
1.8
3 16
1 *.**
*
**
1.4
3.91
1
4
2
2.51
3 17
2 *.**
*
**
5.6
7.5
2
3
2
1.9
3 17
1 *.**
*
**
4.6
7.5
2
7
2
2.9
3 19
1 *.**
*
**
1.4
4
1
12
2
2.6
3 21
2 *.**
*
**
11.8
13
3
2
2
1.2
3 21
1 *.**
*
**
10.8
13
3
11
2
2.2
4
1
1
8.8
5 13^17^18*.**
7.5
2
18
1
1.3
4
2
1
8.8
6 13^17^18*.**
7.5
2
18
1
1.3
4
3
1
8.8
4 13^17^18*.**
7.5
2
17
1
1.3
4
4
1
4
7 17^18^19*.**
4
1
19
1
0
4
5
1 *.**
12 13^17^18*.**
*.**
*
*
*
0
4
6
1
4
9 13^15^17*.**
3.1
1
15
1
0.9
4
7
1
8.8
3 13^17^18*.**
7.5
2
17
1
1.3
4
8
1
4
10 13^17^18*.**
3.4
1
20
1
0.6
4
9
1
4
8 15^13^21*.**
3.1
1
15
1
0.9
4 10
1
8.8
2 13^15^16*.**
7.5
2
13
1
1.3
4 11
1 *.**
11 13^17^18*.**
*.**
*
*
*
0
4 12
1
8.8
1 13^15^17*.**
7.5
2
13
1
1.3
4 13
2 *.**
*
**
5.6
7.5
2
10
2
1.9
4 13
1 *.**
*
**
4.6
7.5
2
12
2
2.9
4 15
2 *.**
*
**
2.4
3.1
1
6
2
0.7
4 15
1 *.**
*
**
1.4
3.1
1
9
2
1.7
4 17
2 *.**
*
**
5.6
7.5
2
3
2
1.9
4 17
1 *.**
*
**
4.6
7.5
2
7
2
2.9
4 18
2 *.**
*
**
5.6
7.5
2
2
2
1.9
4 18
1 *.**
*
**
4.6
7.5
2
1
2
2.9
4 19
1 *.**
*
**
1.4
4
1
4
2
2.6
4 20
1 *.**
*
**
1.4
3.4
1
8
2
2
5
1
1
8.8
2 14^20^17*.**
7.49
2
14
1
1.31
5
2
1 *.**
6 20^17^14*.**
*.**
*
*
*
0
5
3
1
8.8
5 20^17^14*.**
7.45
2
17
1
1.35
5
4
1
13.6
10 14^17^13*.**
13.25
3
13
1
0.35
5
5
1 *.**
9 20^17^14*.**
*.**
*
*
*
0
5
6
1
4
7 20^14^15*.**
3.2
1
15
1
0.8
5
7
1
13.6
12 14^17^18*.**
13.25
3
13
1
0.35
5
8
1
8.8
11 20^14^17*.**
7.5
2
18
1
1.3
5
9
1
8.8
4 17^15^13*.**
7.45
2
17
1
1.35

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Purdue University
Fall 2016
Department of Economics
Professor Sandra Maximiano
1
ECON471
BEHAVIORAL ECONOMICS
LAB REPORT #2
Due Tuesday, September 6, 2016, at beginning of your class.
Late submissions will
NOT
be accepted.
In this experiment we simulated a market with 9 sellers and 12 buyers that trade simultaneously.
The sellers begin by choosing the single quality grade and the single price at which all of sellers’
units are offered for sale. Sellers can offer at most two units. The grade can be any number from
1 to 3; a higher grade costs more to produce and is worth more to buyers. The table below shows
the
costs
of different grades (sellers face the same costs). Unsold units are not produced and
hence incur no cost.
grade 1
grade 2
grade 3
seller cost of 1st unit
$1.40
$4.60
$10.80
seller cost of 2nd unit
$2.40
$5.60
$11.80
For the first 5 periods
(rounds)
buyers are given the chance to purchase from one of the sellers
at the grade and price listed.
Each buyer demands only one unit of the product, and buyers
have the same valuations. The value to the buyer depends only on the quality grade, not on
whether it is the seller’s first or second unit in the period.
Buyer values: $4.00 for
grade 1
, $8.80 for
grade 2
, and 13.60 for
grade 3
.
A buyer’s earnings are calculated as the difference between the value and the purchase price:
Buyer earnings = value for grade purchased – seller’s price
Sellers earn money by making one or more sales at a price that is above the cost of the unit. A
seller’s earnings are calculated as
the sum of the earnings
on the units actually sold:
Seller earnings = sale price – cost of the grade produced
1.
Draw the demand and supply curves for each grade in a graph. Please draw big, label the
axes, and indicate the units of measurement.
2.
Using the unit costs and buyers’ values compute the total surplus for each grade level.
3.
Compare the equilibrium profits for each grade.

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Purdue University
Fall 2016
Department of Economics
Professor Sandra Maximiano
2
4.
Consider an increase in the cost for each seller’s first unit for grade 2 of $0.25. What
happen to the profits for grade 2 compared to the profits for other grades? How does this
cost increase affect the grade’s convergence to the equilibrium level?
Now let’s look to what actually happened in the experiment. For this lab you are going to use the
data from Section 1 (data lab 2.xlsx). The data can be located in the Excel spreadsheet on
Blackboard. The complete instructions are also posted.
5.
For the first five periods compute the
average price
and the
market efficiency
.
(Fill the following table)
Round
average price
Efficiency
1
2
3
4
5
6.
How many
units were sold
in each of the five periods? What was the
average quality
provided
in each period (Fill the following table)?
Comment on the results
.
Round
Average grade
Quantity per round
1
2
3
4
5
7.
In periods 6-10 buyers were not informed about the quality grade.
What were the
consequences of consumers not getting informed about the product’s quality grade?
Comment on the dynamics of price, quality, and efficiency in both treatments
(Hint:
repeat Questions 5 and 6 for rounds 6-10 and
comment the results
).

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