Consider an equilibrium of a single product market jointly determined by a supply function q* = a, + a, •p° + U and a demand function q* = Bo + B1 • p* +V, where q* indicates the equilibrium quantity and p*indicates the equilibrium price, then O A. we will run into the simultaneous equations problem, which will cause estimation inconsistency. O B. we can have bi-directional causality between q* and p*. O C. q* and p* will both be endogenous. O D. all of the above.

Consider an equilibrium of a single product market jointly determined by a supply function q* = a, + a, •p° + U and a demand function q* = Bo + B1 • p* +V, where q* indicates the equilibrium quantity and pindicates the equilibrium price, then O A. we will run into the simultaneous equations problem, which will cause estimation inconsistency. O B. we can have bi-directional causality between q and p. O C. q and p* will both be endogenous. O D. all of the above.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.13P

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