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Consider an equilibrium of a single product market jointly determined by a supply function q* = a, + a, • p* + U and a demand function q* = Bo + B1 • p° + V, where q* indicates the equilibrium quantity and p* indicates the equilibrium price, then O A. we will run into the simultaneous equations problem, which will cause estimation inconsistency. O B. we can have bi-directional causality between q* and p*. O C. q* and p* will both be endogenous. O D. all of the above.

Consider an equilibrium of a single product market jointly determined by a supply function q* = a, + a, • p* + U and a demand function q* = Bo + B1 • p° + V, where q* indicates the equilibrium quantity and p* indicates the equilibrium price, then O A. we will run into the simultaneous equations problem, which will cause estimation inconsistency. O B. we can have bi-directional causality between q* and p*. O C. q* and p* will both be endogenous. O D. all of the above.

Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter2: Systems Of Linear Equations
Section2.4: Applications
Problem 23EQ: 23. Consider a simple economy with just two industries: farming and manufacturing. Farming consumes...
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Consider an equilibrium of a single product market jointly determined by a supply function q* = a, + a, • p° + U and a demand function q* = Bo + B1 * p* +V, where q* indicates the equilibrium quantity and p* indicates the equilibrium price, then O A. we will run into the simultaneous equations problem, which will cause estimation inconsistency. B. we can have bi-directional causality between q* and p*. O C. q* and p* will both be endogenous. O D. all of the above.
Transcribed Image Text:Consider an equilibrium of a single product market jointly determined by a supply function q* = a, + a, • p° + U and a demand function q* = Bo + B1 * p* +V, where q* indicates the equilibrium quantity and p* indicates the equilibrium price, then O A. we will run into the simultaneous equations problem, which will cause estimation inconsistency. B. we can have bi-directional causality between q* and p*. O C. q* and p* will both be endogenous. O D. all of the above.
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