2. A Market in Wheat Simulation Questions and Discussion Take notes as needed

3. Questions  At what price was wheat most frequently sold in each round?  This price is known as the market clearing price or equilibrium. Why would it be called Market Clearing Price?

4. Simulation Results  In which round did the greatest spread in prices occur? Least Spread? Explain.  Who determined prices buyers, sellers or government?  Explain the role of the invisible hand? Give examples of what it did?

5. More Questions…  How did competition among the sellers & buyers influence the price? Explain examples of self- interest…  Predict what would happen if there were many more buyers than sellers? Example of an industry in America like this??

6. Markets with few sellers  Why would the market-clearing price rise if there were more buyers than sellers?

7. More Questions…  Was the market efficient?  Was the market frustrating? Is this really how it is??  (Why would the market-clearing price rise if there were more buyers than sellers?)

8. Markets that are purely competitive or Perfect Competition  What would happen if there were many more sellers than buyers?  Examples of an industry in society?  Should something be done??

9. Price Floor  What happened when the Government instituted a Price Floor at $8?  Was this efficient? Explain why it backfired?

10. Price Ceiling  Explain what happened when the Government instituted a Price Ceiling at $3?  Was this efficient? Explain why it backfired?

11. Worksheet of prices  Complete the worksheet on prices on the reverse of your score sheet?  Answers:  1. $6  2. Any prices greater than $6  3. Any prices below $6

12. What is a combine? a b c d