The demand function of good 1 is given by D = D(P1, P2, y) where p₁ is the price of good 1, p2 the price of a related good, and y consumer's income. The supply function of good 1 is S = S(P₁, P2) Carry out a general comparative-statics analysis of the effects of p2 and y on the equilibrium price of good 1.

The demand function of good 1 is given by D = D(P1, P2, y) where p₁ is the price of good 1, p2 the price of a related good, and y consumer's income. The supply function of good 1 is S = S(P₁, P2) Carry out a general comparative-statics analysis of the effects of p2 and y on the equilibrium price of good 1.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.3P

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