...The theory of market equilibrium states that market forces tend toward a balance, or equilibrium, of price and quantity, unless an outside source intervenes to disrupt the balance (University of Phoenix, 2010). The product I will be discussing is the Apple iPhone and how it reaches its market equilibrium. Apple goes through three phases when releasing inventory to stores (through personal experience.) The first phase is to release a lot of inventory on the day of release. The second phase is slowly release inventory to keep demand up. The third phase is release enough inventory so that all stores have supplies readily available. By being strategic with the quantity of iPhones released Apple set their own market equilibrium. Demand is a schedule that shows the various amounts of a product that consumers are willing and able to buy at each specific price in a series of possible prices during a specified time period (McConnell, Brue, & Flynn, 2009). This demand on a product is greatly affected by supply, which is a schedule that shows amounts of a product a producer is willing and able to produce and sell at each specific price in a series of possible prices during a specified time period (McConnell, Brue, & Flynn, 2009). When the iPhone first releases every Apple and AT&T store receive very large amounts of inventory. Most of the customers waiting at the stores will get an iPhone, however, those that did not wait before stores hourse usually will not get a phone. The reason...
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...Market Equilibration Process Jeremiah D. Wood ECO/561 April 19, 2014 Professor John Lindvall Market Equilibration Process Economic equilibrium is defined as a condition or state in which the economic forces are at a balance. In this particular discussion, one will discuss equilibration, the process of moving between two different points that is affected by a change in demand or supply. One will cover how a specific world event, Hurricane Katrina, caused home prices in Baton Rouge, Louisiana to fluctuate between two equilibrium states. Also to be covered is how the process of said movement occurred using the behaviors of both supply firms and consumers. In the late summer of 2005, Hurricane Katrina bared down on the City of New Orleans and the surrounding areas. This storm caused a surge that caused the storm levees to break that in turn, flooded the City of New Orleans and took most of the city’s housing with it. Because of the destruction, about two hundred and fifty thousand people were relocated to nearby Baton Rouge, making it the largest city in Louisiana. Let us start the discussion by stating that the average price of a single-family home in Baton Rouge before Katrina was one hundred thirty thousand dollars, shown by point A on the graph (O'Sullivan & Sheffrin, 2002). With the explosion of the population, the average price jumped to one hundred and fifty six thousand dollars within six months, point B, and the market shrunk from three thousand six...
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...should you charge for a midsized automobile if you expect to maintain your record sales? 2) In a two-player, one-shot simultaneous-move game each player can choose strategy A or strategy B. If both players choose strategy A, each earns a payoff of $500. If both players choose strategy B, each earns a payoff of $100. If player 1 chooses strategy A and player 2 chooses strategy B, then player 1 earns $0 and player 2 earns $650. If player 1 chooses strategy B and player 2 chooses strategy A, then player 1 earns $650 and player 2 earns $0. a. Write the above game in normal form. b. Find each player's dominant strategy, if it exists. c. Find the Nash equilibrium (or equilibria) of this game. d. Rank strategy pairs by aggregate payoff (highest to lowest). e. Can the outcome with the highest aggregate payoff be sustained in equilibrium? Why or why not? a. Write the above game in normal form. | |Player 1 chooses A |Player 1 chooses B...
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...185 EQUILIBRIUM 185 UNIT 7 EQUILIBRIUM After studying this unit you will be able to • identify dynamic nature of equilibrium involved in physical and chemical processes; • state the law of equilibrium; • explain characteristics of equilibria involved in physical and chemical processes; • write expressions for equilibrium constants; • establish a relationship between Kp and K c ; • explain various factors that affect the equilibrium state of a reaction; • classify substances as acids or bases according to Arrhenius, Bronsted-Lowry and Lewis concepts; • classify acids and bases as weak or strong in terms of their ionization constants; • explain the dependence of degree of ionization on concentration of the electrolyte and that of the common ion; • describe pH scale for representing hydrogen ion concentration; • explain ionisation of water and its duel role as acid and base; • describe ionic product (Kw ) and pKw for water; • appreciate use of buffer solutions; • calculate solubility product constant. Chemical equilibria are important in numerous biological and environmental processes. For example, equilibria involving O2 molecules and the protein hemoglobin play a crucial role in the transport and delivery of O2 from our lungs to our muscles. Similar equilibria involving CO molecules and hemoglobin account for the toxicity of CO. When a liquid evaporates in a closed container, molecules with relatively higher kinetic energy escape the liquid surface into the vapour...
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...In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy.[1] If each player has chosen a strategy and no player can benefit by changing strategies while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium. Stated simply, Amy and Will are in Nash equilibrium if Amy is making the best decision she can, taking into account Will's decision, and Will is making the best decision he can, taking into account Amy's decision. Likewise, a group of players are in Nash equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others in the game. Contents [hide] * 1 Applications * 2 History * 3 Definitions * 3.1 Informal definition * 3.2 Formal definition * 3.3 Nash's Existence Theorem * 4 Examples * 4.1 Coordination game * 4.2 Prisoner's dilemma * 4.3 Network traffic * 4.4 Competition game * 4.5 Nash equilibria in a payoff matrix * 5 Stability * 6 Occurrence * 6.1 Where the conditions are not met * 6.2 Where the conditions are met * 7 NE and non-credible threats * 8 Proof of existence * 8.1 Proof using the Kakutani fixed...
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...Terms Hemoglobin Fetal Hemoglobin Dynamic Equilibrium – when rates of forward and reverse reactions are equal, rendering static concentration(s) of reactants and products Kc – Equilibrium constant with respect to concentration in molarity (M) Kp – Equilibrium constant with respect to partial pressures in atmospheres Equilibrium constant – ratio of concentration of products raised to their stoichiometric coefficients divided by reactants raised to their stoichiometric coefficients (reaction quotient) Heterogeneous equilibrium Reaction quotient Le Châtelier’s Principle Concepts Law of Mass Action when aA+bB↔cC+dD Kc=CcDdAaBb when A↔2B, K1=B2A when 2B↔3C, K2=C3B2 A↔2B2B↔3CA↔3C Koverall=C3A nA+2nB↔3nC therefore K'=C3nAnB2n=Kn Heterogeneous reactions – concentrations of pure solids (s) are constant; both pure solids and pure liquids (l) are excluded from equilibrium expression Calculations Equilibrium constant K=CcDdAaBb Equilibrium equation A+2B↔3C, therefore… Kforward=C3AB2 Kreverse=AB2C3 Kreverse=1Kforward Kc=CcDdAaBb PA=ART eq 14.1 Kp=Kc(RT)∆n eq. 14.2 Key Tables/Figures: Table 14.1 Initial and Equilibrium Concentrations for the Reaction H2g+I2g↔2HIg at 445°C Initial | Equilibrium | Equilibrium Constant | H2 H2 | | I2 I2 | | HI HI | | 0.50 | 0.50 | 0.0 | 0.0 | 0.0 | 0.50 | 0.50 | 0.50 | 0.50 | 1.0 | 0.50 | 0.0 | 0.50 | 1.0 | 0.0 | | H2 H2 | | I2 I2 | | HI HI | | 0.11 | 0.11 | 0.78 | 0.055 | 0.055 | 0.39 | 0.165 |...
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...Punctuated equilibrium, as proposed by Gould and Eldredge in 1972, is a model of species evolution to counter the explanation of evolutionary change through phyletic gradualism, or the slow accumulation of novel adaptations over evolutionary time, culminating in the appearance of new species (speciation). Gould and Eldredge argue that evidence of gradualism would require fossil evidence of intermediary stages in a species’ evolution, with different specimen of an evolving species exhibiting ancestral traits and an increasing number of derived traits leading towards the present form. Paleontologists, however, had long noted that the fossil record was marked by long periods of stasis (on a geological scale) with the sudden appearance of new species, though these gaps were interpreted as simply missing information (Gould and Eldredge 1993). While fossil preservation is notoriously problematic (Wood et al. 1992), Gould and Eldredge (1972, 1993) proposed that the gaps in the record arise not from artifacts of preservation, but from an alternate mechanism of evolution by which small populations become isolated from parent stocks and rapidly accumulate novel adaptations leading to speciation. Thus, parent stocks remain in the geological record parallel with newly adapted species. Successfully adapted species would thereafter remain in the fossil record as well. Thus, most species in the fossil record appear in a state of equilibrium across geological time (i.e. not exhibiting...
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...Information k = units of Capital l = units of Labour rK = Cost of Capital in dollars = $20 wL = Labour cost in dollars = $10 Output: Q=K^(1/4) √L Solution Min: C_((K,L))=r_K .k+ w_L .l=20k+10l Constraint: Q=k^(1/4) √l Using Lagrangian method L_((k,l,λ))=20k+10l- λ(k^(1/4) .l^(1/2)-Q) dL/dk=20- 1/4 λk^(-3/4) .l^(1/2)=0 dL/dl=10- 1/2 λk^(1/4) .l^(-1/2)=0 dL/dλ=- 1/4 λk^(1/4) .l^(1/2)-Q=0 Equating 20- 1/4 λk^(-3/4) .l^(1/2)= 0 20= 1/4 λk^(-3/4) .l^(1/2) λ= (80k^(3/4))/l^(1/2) 10- 1/2 λk^(1/4) .l^(-1/2)=0 10= 1/2 λk^(1/4) .l^(-1/2) λ= (20l^(1/2))/k^(1/4) (80k^(3/4))/l^(1/2) = (20l^(1/2))/k^(1/4) 80k=20l 4k=l Substituting Lagrangian relation into Output equation Q=K^(1/4) √L Q=k^(1/4) 〖(4k)〗^(1/2) Q=k^(1/4) 〖2k〗^(1/2) Q/2=k^(3/4) k= Q^(4/3)/2^(4/3) = Q^(4/3)/∛16= Q^(4/3)/(2∛2) Solving for l 4k=l 2^2 (Q^(4/3)/2^(4/3) )=l l= Q^(4/3)/2^(2/3) = Q^(4/3)/∛4 Minimum total expenditure on capital and labour in terms of Q C_((K,L))=20k+10l C_((K,L) )=2^2.5.(Q^(4/3)/2^(4/3) )+10(Q^(4/3)/2^(2/3) ) C_((K,L) )= (5Q^(4/3)+10Q^(4/3))/2^(2/3) = 〖15Q〗^(4/3)/2^(2/3) = 〖2^2.5.Q〗^(4/3)/2^(2/3) = (5Q^(4/3))/∛2 Information x denotes units of good X y denotes units of good Y Cx denotes the unit cost of good X in dollars = $1 Cy denotes the unit cost of good Y in dollars = $1 0 < β < 1 M denotes the maximum...
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...Purpose The main objective of this experiment was to experimentally derive the equilibrium constant for the reaction between iron (III) and thiocyanate ions. The second objective of this experiment was to use the spectrophotometer to measure the absorbance of light by [FeSCN2+] at various concentrations and then to plot its corresponding calibration curve to mathematically determine the concentration of [FeSCN2+] at equilibrium. The final objective of this experiment was to observe Le Chatelier’s Principle when stress was applied to the reaction between iron (III) and thiocyanate ions and to determine in which direction the react shifted to maintain equilibrium. Introduction Chemical reactions do not always run to completion, such that the entire limiting reagent or all reactants are consumed entirely. In many cases many chemical reactions establish an equilibrium, where the amount of reactants and products are constantly in flux in an effort to maintain a set amount. At equilibrium the rate of the forward reaction equals the rate of the reverse reaction. Le Chatelier’s Principle states that if any stress is applied to the reaction when it is at equilibrium, the reaction will shift in order to re-obtain equilibrium. The resulting shift can either be a reduction or increase in the amount of product or the reactant. If there is a decrease in the amount of reactant and an increase in the amount of product the reaction has shifted...
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...Dropbox when completed. 1. Explain what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well): a. The price of Coke decreases. Pepsi and Coke are Substitute goods. If the price of Coke decreases then people would pick up a Coke instead of the Pepsi because the price is better.. The equilibrium price would decrease in order to make the same amount of money. They would need to make more in order to make the same amount of money. b. Average household income falls from $50,000 to $43,000 The demand for Pepsi would decrease because Pepsi is not a necessity for the home more of a luxury. When the income decrease people will cut down on the luxuries and buy only what is needed. c. There are improvements in soft-drink bottling technology. This means that the product would be cheaper and faster to make. They can sell the product cheaper and produce more. d. The price of sugar increases and the Pepsi launches an extremely successful advertising campaign. This means that the product would be more expensive to make because sugar is more expensive. Pepsi would have to increase pricing and the quantity would decrease. 2. Use the following equations for demand and supply to solve for market equilibrium price and quantity: Demand: Qd = 100 – 4P ...
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...A Nash equilibrium is a pair of strategies, one for each player, in which each strategy is a best response to other. These represent the likely outcome of the game. According to Roger B. Myerson, “If we can predict the behavior of all the players in such a game, then our prediction must be a Nash equilibrium, or else it would violate this assumption of intelligent rational individual behavior. That is, if our predicted behavior does not satisfy the conditions for Nash equilibrium, then there must be at least one individual whose expected welfare could be improved simply by re-educating him to more effectively pursue his own best interests, without any other social change.” The above argument does not prove that Nash equilibrium should be the only methodological basis for analysis of social institutions. But it does explain why studying Nash equilibria should be a fruitful part of the critical analysis of almost any kind of social institution. The prisoners dilemma is one of the best examples of Nash Equilibrium. | | Jack | | | | C | NC | Tom | C | -10,-10 | 0,-20 | | NC | -20,0 | -5,-5 | | | | | *Numbers represent years in prison If every player in a game plays his dominant pure strategy (assuming every player has a dominant pure strategy), then the outcome will be a Nash equilibrium.According to the above game both players know that 10 years is better than 20 and 0 years is better than 5; therefore, C is their dominant strategy and they will both...
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...buyers and sellers meet to exchange money for goods or services. The price refers to how supply and demand interacts to set the market price for the selling of goods. The concepts of the market equilibrating process will describe and analyze how its factors determine to purchase a Chevy Volt electric automobile during this economic crisis. Market Equilibrium Process Market equilibrium is a process that allows the number of goods by suppliers to equal the number of goods of demand. Once this happens the market at that moment is in a state of equilibrium. The market equilibrium price, p, and equilibrium quantity, q, are determined by where the demand curve of the buyers, D, crosses the supply curve of the sellers, S. The horizontal line of a graph below shows each unit from zero to quantity (q) the demand curve is above the supply curve, meaning that the consumer or customer is willing to pay more to buy those units than they cost to produce. The vertical line displays the prices on the graph. If the price is below the equilibrium the demand would be greater than the supply and there is a shortage. If prices are above the equilibrium the supply would be greater than demand and there is a surplus of supplies (McConnell, 2009). Laws of Demand and Determinants The law of demand is when the price is higher than the consumer is willing to pay for the product resulting in a lower demand. There are five ceteris paribus demand determinants that affect consumers. They...
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...Determining the equilibrium constant from pH values of changing concentrations of ethanoic acid Design Research question: How will altering the concentrations of ethanoic acid affect the pH value, and, in-turn, the equilibrium constant? Background information: When weak acids react, the reaction typically does not go to completion. Rather, the system goes to an intermediate state in which the rates of the forward and reverse reactions are equal. Such a system is said to be in chemical equilibrium. When equilibrium is reached, the reactants and the products have concentrations which do not change with time. When in equilibrium at a particular temperature, a reaction mixture obeys the Law of Chemical Equilibrium, which imposes a condition on the concentrations of reactants and products. This condition is expressed in the equilibrium constant Kc for the reaction. In this experiment, I will study the equilibrium properties of the reaction between ethanoic acid, otherwise known as acetic acid (CH3COOH) and water (H2O): CH3COOH(aq) + H2O(l) CH3COO-(aq) + H3O+(aq) When solutions containing ethanoic acid and water are mixed, they react to some extent, forming CH3COO- and H3O+. As a result of the reaction, the equilibrium amounts of CH3COOH and H2O will be less; for every mole of CH3COO- formed, one mole of CH3COOH and one mole of H2O will react. The equilibrium constant expression Kc for Reaction 1 is: Kc = [CH3COOH] / [H3O+][CH3COO-] The value of...
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...Questions 1 As seen from the excel sheet we conclude that the NVP for Project 1 results in negative amounts, as a result we do not choose project 1. As for project 2 amongst the two options we will choose Project two with DR at 10% as it yields a higher NVP value. Question 2 a) What is the equilibrium price and quantity of fertilizer in an unregulated, competitive market? 6 tons per day b) What is the efficient quantity of fertilizer? 4 tons per day c) Suppose government imposes a tax equal to the marginal external cost. What is the equilibrium price paid by consumers and the equilibrium quantity after implementation of the tax? Consumers will pay $1,200 per ton, and the efficient level of output at 4 tons per day will be achieved. d) At the output level in part (6), how much is the tax per one ton? $1200 - $800 = $400 e) How much tax revenue does government collect? $400 per ton x 4 tons per day = $1,600 per day f) What is the deadweight loss borne by society if the externality is left uncorrected? (6-4)x(1,600-1,000)/2 = $600 Question 3 a) According to Coase theorem it doesn’t matter who builds the fence as long as it is less than the cost of the crop damage. However, to answer the question; the rancher builds the fence, because the cost of the fence ($100) is less than the cost of compensating the farmer for crop damage. Together, the rancher and the farmer are $200 better off ($300 crop damage less $100...
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...Risk in Housing Markets: An Equilibrium Approach⇤ Aurel Hizmo† NYU Stern January 30, 2012 Abstract Homeowners are overexposed to city-specific house price risk and income risks, which may be very di cult to insure against using standard financial instruments. This paper develops a micro-founded equilibrium model that transparently shows how this local uninsurable risk a↵ects individual location decisions and portfolio choices, and ultimately how it a↵ects prices in equilibrium. I estimate a version of this model using house price and wage data and provide estimates for risk premia for di↵erent cities, which imply that homes are on average about $20000 cheaper than they would be if owners were risk-neutral. This estimate is over $100000 for volatile coastal cities. Next, I simulate the model to study the e↵ects of financial innovation on equilibrium outcomes. Creating assets that hedge city-specific risks increases house prices by about 20% and productivity by about 10%. The average willingness to pay for completing the market per homeowner is between $10000 and $20000. Welfare gains come both from better risk-sharing and from more e cient sorting of households across cities. ⇤ I am deeply grateful to Patrick Bayer, Andrew Patton, and Peter Arcidiacono for their encouragement and support. I also thank Robert McMillan, Tim Bollerslev, Vish Viswanathan, Chris Timmins, Jimmy Roberts and the seminar participants at Duke Finance, the ERID Conference at Duke, Fed Board, NYU Stern...
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