supply/demand question

[anasylum]

What makes the 2 X 2 set of equations for supply and demand easy to solve when locating the equilibrium point? Is it because at market equilibrium they are equal at that point?

 

[tkhunny]

I'm not sure I understand the question. Are you asking about the supply and demand equilibrium being easy to find or the two equations being easy to solve? It's sort of the same question, but not entirely.

If you have a linear model, the two equations are easily solved, period.

If you do not have a linear model, picking a very small region around a known solution may allow you to use linear approximations for a very good approximation of the solution.

What was the question, again?

 

[anasylum]

As simultaneous equations for supply and demand are particularly easy to solve to find the equilibrium point. What makes this 2 X 2 set of equations so easy to solve...and why can we set the two equations equal? Is the reason, the demand and supply can be set equal at market equilibrium is that the price is the same?

 

[stapel]

As simultaneous equations for supply and demand are particularly easy to solve to find the equilibrium point.

This is not a complete sentence.

What makes this 2 X 2 set of equations so easy to solve.

You are the one who said that they "are particularly easy to solve". If you don't know this to be true, why did you assert such? Or was the statement some portion of something else that you were quoting...?

...and why can we set the two equations equal?

Which "two equations"? "Equal" to what?

Is the reason, the demand and supply can be set equal at market equilibrium is that the price is the same?

Um... what...?

Please provide the full and exact text of the exercise, exactly as it appears in the assignment, so we have some chance of understanding what is being asked. Thank you.

Eliz.

 

[anasylum]

Ok, sorry, the full question is, the simultaneous equations for supply and demand are particularly easy to solve to find the equilibrium point. What makes this 2 X 2 set of equations so easy to solve? How would one know to set the equations equal?

Does this make sense?

 

[stapel]

...the simultaneous equations for supply and demand are particularly easy to solve to find the equilibrium point. What makes this 2 X 2 set of equations so easy to solve? How would one know to set the equations equal?

Since we don't have the supply and demand equations, it is difficult to say anything specific with respect to solving their system. I would guess that, in mentioning a two-by-two set of equations, we should assume that the system is very simple, with each equation being linear. But this is a very simplified form.

I'm not sure what is meant by asking "what makes the system easy to solve", since we don't know what the system is...?

And systems of equations are only sometimes solved by setting the equations equal to each other. Perhaps the exercise is making reference to some particular system, with each equation solved for a shared variable...? If so, then one would know to set the supply equation equal to the demand equation because this is the definition of "equilibrium point".

Sorry I couldn't be more helpful, but, not having access to your book, it is difficult to know how to proceed.

Eliz.