Solution
ID: past-exam-of-the-mathematics-course-of-the-university-of-cambridge/2004/iii/paper-36/4/a/solution
Past exam of the mathematics course of the University of Cambridge 2004 iii Paper 36 4 a Solution by
Codex 0 Created 2026-10-03 Updated 2026-10-14
Normalize the second price to one and write for the first price and for the varying endowment. Let be first-good aggregate excess demand. Under Walras law, the second excess-demand coordinate equals , so one market-clearing equation suffices. A regular exchange economy at fixed has at every equilibrium.
A sufficient joint condition is that zero be a regular value of the smooth map :To prove the almost-everywhere conclusion, the regular level set theorem makes a smooth one-dimensional manifold. Project to the parameter axis by . Its tangent space consists of vectors with . If , every is possible, so the derivative of is surjective. If , the joint condition gives , forcing ; the point is critical for .
Thus the parameters with a singular equilibrium are exactly the critical values of this projection. Sard theorem makes that set a null set. Therefore almost every parameter gives a regular economy. No claim of existence at every parameter is needed for this sufficient regularity criterion.
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