Vernon Smith Tested the Supply and Demand Model in the Laboratory

question 49

Multiple Choice

Vernon Smith tested the supply and demand model in the laboratory and found that:

• A) the results were not consistent with competitive price theory, as he expected.
• B) buyers and sellers quickly converged on the predicted equilibrium.
• C) the model may work in real life, but it does not work in the laboratory.
• D) the buyers with the lowest willingness to pay bought the goods.

---

Definitions:

Consecutive Days

Successive days that follow one after the other without interruption.

Franchise

A licensing arrangement where a franchisor allows a franchisee to use the franchisor's trademark, systems, and business model in return for a fee.

Harmful Ingredient

A substance found within a product that can cause negative health effects or damage to the environment on exposure or consumption.

Cookie Dough

A blend of cookie ingredients which is intended to be baked to create cookies.