Your textbook gives the following example of simultaneous causality bias of a two
equation system: In microeconomics, you studied the demand and supply of goods in a single market. Let the demand and supply for the -th good be determined as follows,
where is the price of the good. In addition, you typically assume that the market clears.
Explain how the simultaneous causality bias applies in this situation. The textbook explained a positive correlation between and for through an argument that started from "imagine that is negative." Repeat this exercise here.
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