Give correlation among Pi and usd with the given supply and demand function.
Consider a product with a supply function Q1 = β0 + β1 + u1, a demand function Qdi =y0+uid. and a ,market equilibrium condition Qsi = Qdi, where uis and uid are mutually independent i.i.d. random variables, both with a mean of zero.
a. Show that Pi and usd are correlated.
b. Show that the OLS estimator of β0, β1 and γ0?