This graph does not illustrate a market per se but a sequential series of market equilibrium prices and quantities through time.
These movements along and/or shifts in the supply and demand curves are reflected in the market equilibrium prices and quantities illustrated in Figures 1 and 2.
Then both countries start from their good labor market equilibrium
, so that country 1 pays a higher wage rate, as noted above.
as the investment of North and South, respectively, the market equilibrium in the North is as follows because the investment demand for the Northern goods by both regions is PI + P[I.
P], Equation (6) that expresses the market equilibrium of Southern goods could be rewritten as
In an efficient market equilibrium without bankruptcy risk, the reinsurer can price this contract without a "distribution uncertainty" premium, provided that the insurer promises to compensate the reinsurer by paying higher premiums after a disaster has occurred.
That is, why would a primary insurance company find it advantageous to purchase reinsurance instead of retaining the risk, especially when financial theory tells us that reinsurance is redundant in the conditions of capital market equilibrium for diversified, widely-held firms (Doherty and Tinic, 1981)?