The following simultaneous equations describe the demand and supply for a particular good in a competitive market. Q_i = ₁P_i + ₁z_i₁ + u_i₁
Q_i = ₂P_i + ₂z_i₂ + u_i₂
Which of the following are the endogenous variables in this model?

Question

The following simultaneous equations describe the demand and supply for a particular good in a competitive market. Q_i =

The following simultaneous equations describe the demand and supply for a particular good in a competitive market. Q<sub>i</sub> = <sub>1</sub>P<sub>i</sub> + <sub>1</sub>z<sub>i</sub><sub>1</sub> + u<sub>i</sub><sub>1</sub> Q<sub>i</sub> = <sub>2</sub>P<sub>i</sub> + <sub>2</sub>z<sub>i</sub><sub>2</sub> + u<sub>i</sub><sub>2</sub> Which of the following are the endogenous variables in this model? A) Pi<sub>,</sub> zi<sub>1,</sub> and z<sub>i</sub><sub>2</sub> B) P<sub>i</sub> and Q<sub>i</sub> C) zi<sub>1,</sub> and z<sub>i</sub><sub>2</sub> D) u<sub>i</sub><sub>1</sub> and u<sub>i</sub><sub>2</sub>

₁P_i +

₁z_i₁ + u_i₁
Q_i =

₂P_i +

₂z_i₂ + u_i₂
Which of the following are the endogenous variables in this model?

Quizplus · Accepted Answer

The endogenous variables are the variables that are determined within the model. In this case, the only variables that are determined within the model are the equilibrium price (P_i) and quantity (Q_i). Therefore, the correct answer is B. The other variables are either exogenous (such as u) or intermediate variables (such as zi) that are determined by other variables in the model.

The Following Simultaneous Equations Describe the Demand and Supply for a Particular