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Consider the following system of simultaneous equations representing the demand-and-supply model:Qs = β1 + β2P + u1 and Qd = α1 + α2P + α3I + α4W + u2, where Qs and Qd are the quantities supplied and demanded respectively, P = price of the commodity, I = income, and W = wealth. What can be said about the identification of the two equations?

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MCQs on Econometrics, which is the use of statistical methods to develop theories or test existing hypotheses in economics or finance. 
 


Consider the following system of simultaneous equations representing the demand-and-supply model:<br>Q<sub>s</sub> = β<sub>1</sub> + β<sub>2</sub>P + u<sub>1</sub> and Q<sub>d</sub> = α<sub>1</sub> + α<sub>2</sub>P + α<sub>3</sub>I + α<sub>4</sub>W + u<sub>2</sub>, where Q<sub>s</sub> and Q<sub>d</sub> are the quantities supplied and demanded respectively, P = price of the commodity, I = income, and W = wealth. What can be said about the identification of the two equations?





 
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