Adams Market

1
Adams Market
Created by Tod Porter and Kriss
Schueller Youngstown State University
A simulated economy with households, firms and
money
2
Circular Flow Diagram
3
Rules for Households

• Allocated 100 hours each period
• Time can be consumed as leisure or sold to
  generate income
• Start with 500 cash
• Earn income by selling time to firms

4
Rules for Households, cont.

• Goods cannot be resold
• All goods are automatically consumed when they
  are purchased
• Utility is based on consumption of leisure and
  two other goods
• Can carry over cash from period to period

5
Rules for Firms

• Goal is to earn profits to pay dividends to
  households and increase net worth of firm
• Firms can produce one product
• Start with 500 endowment of cash and 16 units of
  capital
• Purchase labor time from households
• When purchased, labor is automatically used to
  produce output

6
Rules for Firms, cont.

• Amount of output produced depends on the amount
  of labor purchased, the firms capital stock, and
  the production function
• Cash and unsold output are carried over to the
  next period.
• Unsold output depreciates between periods at a
  rate of 5 percent.
• The firms capital stock depreciates 5 percent
  between periods.

7
Rules for Firms, cont.

• Starting in period 3 you will be able to purchase
  additional units of capital
• Capital purchased will not affect your production
  function until the next period.
• Starting in period 3 you will be able to switch
  industries.
• If you switch industry your capital stock will be
  reduced by 10

8
Structure of Program
Consumer Worksheet Actions Firm Worksheet Acti
ons Functions, Graphs User Record
9
Accessing the Simulation

• URL is http//marketsim.ysu.edu/Simulation/Market
  SimWebSite/demo.htm
• Only use Internet Explorer
• Turn off popup blocking on this site
• Read the QuickStart manual

10
Time Periods
Game starts ?? Period End Time 1 ?? 2 ?? 3 ??
4 ??
11
Scoring
The simulation will account for ?? points, ?? for
participation and ?? for performance.