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This note explains the intuition and analytics behind the class experiment that is commonly called "Trading in a Pit." Following the experiment, we derive supply and demand and discuss market efficiency. This note is part of the refresher course in economics at Darden.
The learning objectives are to refresh students' memories of key concepts and tools from microeconomics and macroeconomics, emphasize the role of economics in the MBA curriculum, and show how analyzing economic agents as maximizers of profit and/or utility deepens one's understanding of the environment of the firm.