8. Consider a general equilibrium model with two commodities. The excess demandfunctions for the two commodities are:El(2P₁)-¹ (P₁+2P₂) - 1E2 = (2P2)¹ (P₁+2P₂) - 2(c) Solve for the equilibrium price vector.What can you say about the stability of the model?Please, Disregard Markings. Thank You.

The eigenvalues of the Jacobian are 1/2 and -2. Since one of the eigenvalues is positive, the model…

8. Consider a general equilibrium model with two commodities. The excess demand functions for the two commodities are: El = (2P₁) ¹ (P₁+2P₂) - 1 E2 = (2P₂)¹ (P₁+2P₂) - 2 Solve for the equilibrium price vector. What can you say about the stability of the model?

8. Consider a general equilibrium model with two commodities. The excess demand functions for the two commodities are: El = (2P₁) ¹ (P₁+2P₂) - 1 E2 = (2P₂)¹ (P₁+2P₂) - 2 Solve for the equilibrium price vector. What can you say about the stability of the model?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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