2. Equilibrium allocations insensitive to a common shock in all prices Consider a competitive market with L goods, N con

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2 Equilibrium Allocations Insensitive To A Common Shock In All Prices Consider A Competitive Market With L Goods N Con 1 (37.5 KiB) Viewed 14 times

2. Equilibrium allocations insensitive to a common shock in all prices Consider a competitive market with L goods, N consumers and J firms. In this setting, as- sume that we find an equilibrium price vector p = R4 and equilibrium allocation (x1, x2 , . . . , xÑ ; Yï‚ Y2, ..., y), where x; € R¹ for every consumer i and y; € R¹ for every firm j. Show that, if we were to scale price vector p to 2p*, where λ>0, then allocation (x₁, x2,..., XN; yi, y2, ..., yj) is still the equilibrium allocation.