The supply and demand equations of two interdependent commodities are Qs, = 4(P₁-1)-5. Qs₂ = P₁ -3. Qp = 27-3P, + P₂ Qo₂ = 25+2P,-3P; where t is the unit tax imposed on good 1. Show that the market equilibrium prices satisfy a matrix equation of the form Ax = b where x = Find the inverse of A and hence solve this system to find P, and P.. Write down the taxation multiplier for P₂.
The supply and demand equations of two interdependent commodities are Qs, = 4(P₁-1)-5. Qs₂ = P₁ -3. Qp = 27-3P, + P₂ Qo₂ = 25+2P,-3P; where t is the unit tax imposed on good 1. Show that the market equilibrium prices satisfy a matrix equation of the form Ax = b where x = Find the inverse of A and hence solve this system to find P, and P.. Write down the taxation multiplier for P₂.
Chapter6: Systems Of Equations And Inequalities
Section6.2: Two-variable Linear Systems
Problem 9ECP
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