Solution-Express the equilibrium condition in matrix form

Express the equilibrium condition in matrix form

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Reference no: EM133077948

Consider the following general equilibrium model with two competitive goods markets. In market 1, demand and supply are equal to QD1 = a-bP1 - eP2 and Qs1 = -f + gP1, respectively. In market 2, demand and supply are equal to QD2 = α-βP1 - εP2 and Qs = -Ø + yP2

In market 2, demand and supply are equal to.All parameters are strictly positive.

a) Express the equilibrium condition in matrix form.

b) Using an echelon matrix, derive the condition under which a unique equilibrium exists.

c) Interpret this condition in terms of mathematics.

d) Using a graph, illustrate what happens if the condition derived in part b) is violated (there are two cases that you will want to cover).

Reference no: EM133077948

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Express the equilibrium condition in matrix form

Reference no: EM133077948

Reference no: EM133077948

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