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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.

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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The supply and demand equations of two interdependent commodities are Qo, 27-3P, + P₂ Qs,= 4(P₁-1)-5. Qs₂ = P; -3. Qo₂ = 25+2P₁ - 3P; where t is the unit tax imposed on good 1. Show that the market equilibrium prices satisfy a matrix equation of the form Ar = b P₁ where x = Find the inverse of A and hence solve this system to find P, and P₂. Write down the taxation multiplier for P₂.
Transcribed Image Text:The supply and demand equations of two interdependent commodities are Qo, 27-3P, + P₂ Qs,= 4(P₁-1)-5. Qs₂ = P; -3. Qo₂ = 25+2P₁ - 3P; where t is the unit tax imposed on good 1. Show that the market equilibrium prices satisfy a matrix equation of the form Ar = b P₁ where x = Find the inverse of A and hence solve this system to find P, and P₂. Write down the taxation multiplier for P₂.
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