Re: General Equilibrium

Posted by bhavookb21 on May 05, 2016; 9:19am
URL: http://discussion-forum.276.s1.nabble.com/General-Equilibrium-tp7600360p7600384.html

what is the reason for getting px=0?

On Thu, May 5, 2016 at 12:09 PM, Dr. Strange [via Discussion forum] <[hidden email]> wrote:

Demand of 1 for x= 5py/px+py
Demand of 1 for y= 5py/px+py
Demand of 2 for x= 10px/px+py
Demand of 2 for y= 10px/px+py

Total demand for x= (5py+10px)/px+py    Total supply=10
Total demand for y= (5py+10px)/px+py     Total supply=5
This gives px=0
Hence 10,5 is competitive as well as pareto efficient
and px=0 py=1 can be price vectors

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