$ONTEXT

$MODEL:DEMAND

$SECTORS:
        X       ! ACTIVITY LEVEL FOR X = DEMAND FOR GOOD X
        Y       ! ACTIVITY LEVEL FOR Y = DEMAND FOR GOOD Y

$COMMODITIES:
        PX      ! PRICE OF X WHICH WILL EQUAL PL
        PY      ! PRICE OF Y WHICH WILL EQUAL 2 PL
        PL      ! PRICE OF THE ARTIFICIAL FACTOR L

$CONSUMERS:
        RA      ! REPRESENTATIVE AGENT INCOME

$PROD:X
        O:PX    Q:1
        I:PL    Q:1

$PROD:Y
        O:PY    Q:1
        I:PL    Q:2

$DEMAND:RA      s:1
        E:PL    Q:120
        D:PX    Q:1     P:(1/2)
        D:PY    Q:1     P:1

$OFFTEXT
$SYSINCLUDE mpsgeset DEMAND

$INCLUDE DEMAND.GEN
SOLVE DEMAND USING MCP;

*********************************************
*Exercises:
*
*(a)The utility function calibration point is arbitrary. 
*Here, we have selected x=y=1 as the reference quantity. 
*Revise the program to use a different calibration point 
*where x=2 and y=1, where MRS(2,1)=1/4. 
*(Remember to modify both the Q: and P: fields). 
*Rerun the model to demonstrate that this does not change the result.
*
*(b) Increase the price of x from 1 to 2 by changing the 
*Q: coefficient for PL in sector X from 1 to 2. What happens to 
*the demand for x? Explain why a change in the price of x is 
*represented by a change in the Q: field for sector X.
*
*(c)  Compute an equilibrium in which commodity y is defined 
*as the numeraire.