Q.6 (b)Suppose there two goods 1, and 2 with prices p, and p, and the supply and demand functions are specified as follows: S₁ (P₁, P2) == 3p₁; D₁ (P₁, P2)=8-4 P2- P₁ P2 ≤2 and S2 (P1, P2) 5 P2; D2 (P₁, P2) 24-6 p₁- P2, P₁ ≤ 4 The market for good 1 is said to be in equilibrium at prices (p₁, p2°) where S₁ (P₁, P2) = D₁ (P₁, P2°). The market for good 2 is said to be in equilibrium at prices (p₁, p₂) where S₂ (P₁, P₂) =D₂ (P₁, P₂) Demonstrate that each market has equilibrium when the other's price is fixed. Show that nevertheless no pair of prices exists for the two markets at which they are both in equilibrium.

Q.6 (b)Suppose there two goods 1, and 2 with prices p, and p, and the supply and demand functions are specified as follows: S₁ (P₁, P2) == 3p₁; D₁ (P₁, P2)=8-4 P2- P₁ P2 ≤2 and S2 (P1, P2) 5 P2; D2 (P₁, P2) 24-6 p₁- P2, P₁ ≤ 4 The market for good 1 is said to be in equilibrium at prices (p₁, p2°) where S₁ (P₁, P2) = D₁ (P₁, P2°). The market for good 2 is said to be in equilibrium at prices (p₁, p₂) where S₂ (P₁, P₂) =D₂ (P₁, P₂) Demonstrate that each market has equilibrium when the other's price is fixed. Show that nevertheless no pair of prices exists for the two markets at which they are both in equilibrium.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.7P

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