There is given a market of two products with exogenous demand functions: y (p) = ap +

There is given a market of two products with exogenous demand functions:

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y (p) = ap + v P2 + b, y (p) = - a2 p2 + y2P + b, ai, bi, Vi > 0, i = 1,2 and exogenous supply functions: yi (p) =cipi +81 P2 +d, y2 (p) =C2P2 +82p1 + d2, ci, di, di 0, i = 1, 2. 1. For price of products, the demand and the supply levels determine intervals of values resulting from analytical forms of the demand and supply functions. 2. Check if the two products are: (a) independent, (b) complementary, (c) substitute, to each other. 3. Draw graphs of these functions in space R (in one figure). Determine by what values of parameters bi, di > 0 (i = 1,2) there exists the equilibrium price vector and indicate this vector in the figure. 4. Determine the equilibrium price vector. 5. Determine elasticities of the equilibrium prices with regard to parameters of the supply and the demand functions that determine the prices and give economic interpretation of these elasticities.