Let the demand and the supply functions for a particular commodity satisfy Qdt =22−3Pt and Qst =−2+Pt−1 where Pt denotes the market price in period t. a) Find the general solution Pt. b) Find the (steady-state) equilibrium price level, and analyze whether it is stable or not.

Let the demand and the supply functions for a particular commodity satisfy Qdt =22−3Pt and Qst =−2+Pt−1 where Pt denotes the market price in period t. a) Find the general solution Pt. b) Find the (steady-state) equilibrium price level, and analyze whether it is stable or not.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Let the demand and the supply functions for a particular commodity satisfy

Q_dt =22−3P_t and Q_st =−2+P_t−1 where P_t denotes the market price in period t.

a) Find the general solution P_t.
b) Find the (steady-state) equilibrium price level, and analyze whether it is stable or not.

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