Consider the demand and supply system p = ad +bdqd +ud p = as +bsqs +us with the equilibrium condition qd = qs = q. The parameters bd and bs are −2 and 1.5, respectively. Find the parameters ad and as are such that q = 5 and p = 10. Throughout this question use N = 100, and set the random seed to 14022022. The variable ud has a standard deviation of 3. All randomly generated variables have a mean of zero and are normally distributed unless something else is specified. All Monte Carlo studies should be done with 10,000 repetitions. Part a. Illustrate the supply and demand curves in a graph, together with a sample of simulated price and quantity data. Provide an additional graph where you have included the OLS estimated line of demand equation above. Are your estimates close to the true values of ad and bd ? Solve the question in Python language on Jupyter notebook.
Computer Science
Consider the demand and supply system
p = ad +bdqd +ud
p = as +bsqs +us
with the equilibrium condition qd = qs = q. The parameters bd and bs are −2 and 1.5, respectively. Find the parameters ad and as are such that q = 5 and p = 10.
Throughout this question use N = 100, and set the random seed to 14022022. The variable ud has a standard deviation of 3. All randomly generated variables have a mean of zero and are normally distributed unless something else is specified. All Monte Carlo studies should be done with 10,000 repetitions.
Part a. Illustrate the supply and demand curves in a graph, together with a sample of simulated price and quantity data. Provide an additional graph where you have included the OLS estimated line of demand equation above. Are your estimates close to the true values of ad and bd ?
Solve the question in Python language on Jupyter notebook.
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