4. Demonstrate that if the markets for two commodities are in equilibrium, the third market must also be in equilibrium. 1. Consider a 3-consumer, 3-commodity exchange economy. Index the consumers as a, b, c andcommodities as 1,2,3. Use the letter e to indicate endowments, x to indicate commodities, andp to indicate prices. Also use superscript for commodities and subscripts for consumers. Forexample, the endowment of commodity 1 held by consumer a should be denoted as ea.NOTE: DO NOT USE THE SIGN. USE THE NORMAL "+" SIGN FOR ADDITONS. You have towrite out the elements of each vector in your equation using the appropriate notation asdescribed above. For example, if x is a (3 × 1) vector and if its elements are denoted asX1, X2, X3, you should write[x₁x2[X3

In this case, law of Equi Marginal utility is mainly discussed here. Law of Equi Marginal utility…

Answered: 4. Demonstrate that if the markets for…

4. Demonstrate that if the markets for two commodities are in equilibrium, the third market must also be in equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

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4. Demonstrate that if the markets for two commodities are in equilibrium, the third market must also be in equilibrium.

1. Consider a 3-consumer, 3-commodity exchange economy. Index the consumers as a, b, c and
commodities as 1,2,3. Use the letter e to indicate endowments, x to indicate commodities, and
p to indicate prices. Also use superscript for commodities and subscripts for consumers. For
example, the endowment of commodity 1 held by consumer a should be denoted as ea.
NOTE: DO NOT USE THE SIGN. USE THE NORMAL "+" SIGN FOR ADDITONS. You have to
write out the elements of each vector in your equation using the appropriate notation as
described above. For example, if x is a (3 × 1) vector and if its elements are denoted as
X1, X2, X3, you should write
[x₁
x2
[X3

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