Discuss the signs of the coefficients of the model

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Reference no: EM13210156

Consider the general two-commodity market model:
QD1 = ?0 + ?1P1 + ?2P2
QS1 = a0 + a1 P1 + a2P2
QD2 = ?0 + ?1P1 + ? 2P2
QS2 = b0 + b1P1 + b2P2
where the f and a coefficients pertain to the demand (QD1) and supply (QS1) functions of the first commodity while the f and b coefficients pertain to the demand (QD2) and supply (QS2) functions for the second commodity.

Find the equilibrium solution and discuss the signs of the coefficients of this model and the restrictions that need to be imposed (on the values of the coefficients) to get economically sensible

Reference no: EM13210156

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