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Problem 13.4 (Implicit Function Theorem) Let the supply of one commodity be given as q = S(p), where q' is the quantity supplied and p
Problem 13.4 (Implicit Function Theorem) Let the supply of one commodity be given as q" = S(p), where q' is the quantity supplied and p is the price. Let the demand of the commodity be given as q' = D(p.m), where q is the quantity demanded and m is the income. Assume perfect competition such that q' = q" = q'. Furthermore, let the S() and DO) functions possess continuous derivatives and let aD/ap 0, and aS/ap > 0. Use the Implicit Function Theorem to do comparative statics for aq/am and ap/am given initial equilibrium values q' and p"
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