# Excel Workbooks

## Reservation Prices

A buyer's reservation price is the maximum price he or she is willing to pay for a quantity of a good. A seller's reservation price is the minimum price he or she is willing to accept in payment for a quantity of a good. This workbook looks at how buyers and sellers, focusing only on their reservation prices, can, in the context of a market, produce an outcome that brings the most benefit to society. (Note: The file contains simple Macros; if asked, tell Excel to "Enable Macros".)

## Supply and Demand

This workbook reviews how supply and demand interact to determine the market price and quantity of a good or service. It also reviews how changes in factors underlying demand and supply lead to changes in market prices and quantities. The impact of government-set price controls on a market is also examined. (Note: The file contains a simple Macro; if asked, tell Excel to "Enable Macros".)

## Price Elasticity

This workbook extends the discussion of supply and demand, exploring issues pertaining to a buyer's or seller's responsiveness to a change in price. Elasticity is the name given to a measure of this responsiveness.

## Consumer Choice Model

This workbook has three parts, corresponding to each of the three worksheets in this workbook. The first part explores the nature of consumer preferences as modeled by indifference curves. The second part explores the constraint imposed on consumers by their income and the prices of the goods they buy. This constraint is modeled by a budget line. The third part of the workbook explores how a commodity bundle is chosen by a consumer who seeks to maximize the satisfaction received from the bundle of goods given a budget constraint. If you are not familiar with Excel's Solver add-in, read over these instructions before downloading the workbook.

## Consumer Demand

In this workbook you will vary the price of Food (keeping income and the price of clothing constant) and find how the consumer choice model can be used to uncover the consumer's demand curve for food. Then you will vary income (keeping prices constant) to see how that demand curve shifts. If you are not familiar with Excel's Solver add-in, read over these instructions before downloading the workbook.

## Cost-Minimizing Combination of Inputs

In this workbook we combine information on a firm's production technology with the prices of factor inputs to determine the firm's costs of production. With that information we can explore how a firm decides how to produce -- how many units of each input to employ. We define the optimal combination of factor inputs as the combination that produces a given level of output at a minimum cost. If you are not familiar with Excel's Solver add-in, read over these instructions before downloading the workbook.

## The Price-taking Firm

Now we turn to another fundamental problem faced by a firm; What quantity should be produced? In this workbook we will see how a perfectly competitive firm chooses the level of output that maximizes profit. We also explore how the output choices of an individual firm lead to a supply curve for the entire perfectly competitive market.

## Competitive Product Market

This workbook extends the analysis of profit-maximization by competitive firms. Now we can explore how changes in market demand and supply affect the firm in both the short run and the long run, under different assumptions about the cost structure of the industry. (Note: The file contains a simple Macro that I cannot seem to get rid of! If asked, tell Excel to "Enable Macros".)

## Monopoly/Monopolistic Competition

In the previous workbook, the profit-maximizing firm took the market price as given in deciding how much to produce and offer for sale. In markets with one or even many (as opposed to thousands) of firms, each firm has some control over the price. As a result of this "price-setting power", the profit-maximizing price and output will differ from what would prevail in a perfectly competitive market.

## Labor/Leisure Choice [Under construction]

This workbook has three parts, corresponding to each of the three worksheets in this workbook. The first part explores the nature of worker preferences for leisure and income as modeled by indifference curves. The second part explores the constraint imposed on workers by their non-wage income and the wages they are paid. This constraint is modeled by a budget line. The third part of the workbook explores how the optimum number of leisure hours is chosen by a worker who seeks to maximize the satisfaction received from a combination of leisure and income. If you are not familiar with Excel's Solver add-in, read over these instructions before downloading the workbook.

## Competitive Input Market

This workbook explores the model of a wage-taking firm in a perfectly competitive labor market. In it, you will explore how changes in product demand, worker productivity, and the number of product sellers, affects the wage rate set by the market, and the profit-maximizing number of workers hired by the firm and in the market.

## Monopsonistic Input Market

In the previous workbook, the labor-hiring firm took the market wage as given in deciding how many workers to hire. In labor markets with only one firm hiring labor, that firm has some control over the wage rate paid workers. As a result of this "wage-setting power", the profit-maximizing wage and number of workers hired will differ from what would prevail in a perfectly competitive labor market.

## A General Equilibrium Model

In this workbook you will explore the interactions between a perfectly competitive product market and a perfectly competitive labor market. It is designed to let you explore how, in a competitive market system, everything is connected to everything else.

 Copyright © 1996-2002 Mark S. Walbert, Illinois State University. Original graphics © FTSS. URL: http://www.ilstu.edu/~mswalber/ECO240/ Revised: 03-Aug-2002