Macroeconomics Exam Review 94

Macroeconomics Exam Review 94 - 2.140 Assume there exists p...

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Unformatted text preview: 2.140 Assume there exists p such that z ( p ) . That is z ( p ) = =1 z ( p ) = =1 ( x ( p , ) ) = =1 x ( p , ) =1 or x Aggregate demand is less or equal to available supply. Let = =1 denote the wealth of consumer when the price system is p and let x = x ( p , ) be his chosen consumption bundle. Then x x for every x ( p , ) Let x = ( x 1 , x 2 ,... , x ) be the allocation comprising these optimal bundles. The pair ( p , x ) is a competitive equilibrium. 2.141 For each x , let denote the subsimplex of which contains x and let x , x 1 ,..., x denote the vertices of . Let , 1 ,...,,....
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