What restrictions must be placed on the parameters

Assignment Help Macroeconomics

Reference no: EM13207373

Recall partial equilibrium market model: Qd=a1+b1P , Qs = a2+b2P , Qd = Qs

-Qd = Quantity Demanded

-Qs = Quantity Supplied

-P = Price

- a1 > 0 , a2 <0 , b1 < 0 , b2 > 0

-Solve for the equilibrium values of Q and P (So find Q* and P*) as a function of a1, a2, b1, b2.

- And what restrictions must be placed on the parameters a1b2 and a2b1 so that the value of Q* above makes economic sense

Reference no: EM13207373

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