Consider a correctly-specified demand-supply system: q = a₁p + B1121 + u₁ and p = a29 + B2121 + B22z2 + uz, where (q. p) are respectively the logarithms of traded quantity and price of a commodity, (z1,z2) are observed variables that are uncorrelated with the unobserved error terms (u₁. uz). (a1. B11. a2 B21. B22) are constant parameters, and 1-a1a2 = 0. The second equation is identified when O a. 321 = 0 and 311 = 0. O b. 321 = 0 and 311 * 0. O c. 321 = 0 and 311 = 0. O d. 321 = 0 and 311 = 0.
Consider a correctly-specified demand-supply system: q = a₁p + B1121 + u₁ and p = a29 + B2121 + B22z2 + uz, where (q. p) are respectively the logarithms of traded quantity and price of a commodity, (z1,z2) are observed variables that are uncorrelated with the unobserved error terms (u₁. uz). (a1. B11. a2 B21. B22) are constant parameters, and 1-a1a2 = 0. The second equation is identified when O a. 321 = 0 and 311 = 0. O b. 321 = 0 and 311 * 0. O c. 321 = 0 and 311 = 0. O d. 321 = 0 and 311 = 0.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider a correctly-specified demand-supply system: q = a1p + B1121 + u₁ and p = a2q + B21Z1 + B22Z2 + 42, where (q. p) are respectively the logarithms of traded quantity and price of a commodity, (z₁,z2) are
observed variables that are uncorrelated with the unobserved error terms (u₁, U2), (α1, B11, 02, B21, B22) are constant parameters, and 1 - α102 * 0. The second equation is identified when
O a. B210 and B11 # 0.
O b.
B21 = 0 and 11 * 0.
O c. B21 # 0 and
11 = 0.
O d. B21 = 0 and 11 = 0.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbf578eae-951f-4c79-8782-16b5c4517143%2F6ebc4979-c274-4cd7-9466-d103caa29f67%2Frhnmceg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider a correctly-specified demand-supply system: q = a1p + B1121 + u₁ and p = a2q + B21Z1 + B22Z2 + 42, where (q. p) are respectively the logarithms of traded quantity and price of a commodity, (z₁,z2) are
observed variables that are uncorrelated with the unobserved error terms (u₁, U2), (α1, B11, 02, B21, B22) are constant parameters, and 1 - α102 * 0. The second equation is identified when
O a. B210 and B11 # 0.
O b.
B21 = 0 and 11 * 0.
O c. B21 # 0 and
11 = 0.
O d. B21 = 0 and 11 = 0.
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