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There are two goods: i = 1,2. The markets for both goods are competitive. On the demand side, there are m consumers. Every consumer j
There are two goods: i = 1,2. The markets for both goods are competitive. On the demand side, there are m consumers. Every consumer j has the same income level I; = I. The individual demand function of consumer j = 1, ..., M for good i = 1, 2 is = x 3 (Pi, P-i, I;) = ;I;/pi = where p-i denotes the market price of the other good, and Qi (0,1) is a constant. The market supply function for good i = 1, 2 is = Si= Bipi where Bi > 0 is a constant. Question 1. Show that if every consumers's utility function is strictly increas- ing, then Q1 + a2 = 1. There are two goods: i = 1,2. The markets for both goods are competitive. On the demand side, there are m consumers. Every consumer j has the same income level I; = I. The individual demand function of consumer j = 1, ..., M for good i = 1, 2 is = x 3 (Pi, P-i, I;) = ;I;/pi = where p-i denotes the market price of the other good, and Qi (0,1) is a constant. The market supply function for good i = 1, 2 is = Si= Bipi where Bi > 0 is a constant. Question 1. Show that if every consumers's utility function is strictly increas- ing, then Q1 + a2 = 1
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