4. Demonstrate that if the markets for two commodities are in equilibrium, the third market must also be in equilibrium. 1. Consider a 3-consumer, 3-commodity exchange economy. Index the consumers as a, b, c andcommodities as 1,2,3. Use the letter e to indicate endowments, x to indicate commodities, andp to indicate prices. Also use superscript for commodities and subscripts for consumers. Forexample, the endowment of commodity 1 held by consumer a should be denoted as ea.NOTE: DO NOT USE THE SIGN. USE THE NORMAL "+" SIGN FOR ADDITONS. You have towrite out the elements of each vector in your equation using the appropriate notation asdescribed above. For example, if x is a (3 × 1) vector and if its elements are denoted asX1, X2, X3, you should write[x₁x2[X3

In this case, law of Equi Marginal utility is mainly discussed here. Law of Equi Marginal utility…

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4. Demonstrate that if the markets for two commodities are in equilibrium, the third market must also be in equilibrium.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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4. Demonstrate that if the markets for two commodities are in equilibrium, the third market must also be in equilibrium.

1. Consider a 3-consumer, 3-commodity exchange economy. Index the consumers as a, b, c and
commodities as 1,2,3. Use the letter e to indicate endowments, x to indicate commodities, and
p to indicate prices. Also use superscript for commodities and subscripts for consumers. For
example, the endowment of commodity 1 held by consumer a should be denoted as ea.
NOTE: DO NOT USE THE SIGN. USE THE NORMAL "+" SIGN FOR ADDITONS. You have to
write out the elements of each vector in your equation using the appropriate notation as
described above. For example, if x is a (3 × 1) vector and if its elements are denoted as
X1, X2, X3, you should write
[x₁
x2
[X3

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