#cfa #cfa-level-1 #economics #market-equilibrium #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Variables other than own price and quantity are determined outside of the demand and supply model of this particular market. Because of that, they are called
exogenous variables . Price and quantity, however, are determined within the model for this particular market and are called
endogenous variables
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3.6. Market Equilibriumal gasoline market, the demand function was given by Qdx=f(Px,I,Py) , and the supply function was given by Qsx=f(Px,W) . Those expressions are called behavioral equations because they model the behavior of, respectively, buyers and sellers. <span>Variables other than own price and quantity are determined outside of the demand and supply model of this particular market. Because of that, they are called exogenous variables . Price and quantity, however, are determined within the model for this particular market and are called endogenous variables . In our simple example, there are three exogenous variables (I, P y , and W) and three endogenous variables: P x , Qdx , and Qsx . Hence, we have a system of two equations and three un Summary
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