ABSTRACT
Until now we have been using only one equation to display the relationship between and among our variables. However, there are many instances in which economic phenomena can be adequately explained only by two or more equations. A system of simultaneous equations is needed to examine many common and crucial issues essential to a full comprehension of how the world works. The classical example of such a case is a market in which the equilibrium price, P*, and the equilibrium quantity, Q*, are determined simultaneously in the market by the intersection of the supply curve and the demand curve. Here two equations are needed to solve for the prevailing market conditions because two values need to be determined: equilibrium price and equilibrium quantity.
