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Give an example of an economic situation or issue that would be well modeled in a competitive general equilibrium model. Explain the situ- ation, and
Give an example of an economic situation or issue that would be well modeled in a competitive general equilibrium model. Explain the situ- ation, and why competitive general equilibrium would be a reasonable modelling strategy.[3 points]
Note: Your examples for both questions should be of real world situa- tions, rather than just variants of the static general equilibrium model from the notes. A simple example with a clear explanation is much better than a complicated example that is hard to explain.
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