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The demand and supply functions in a competitive market are Qa=280-4P and Q, = -35+8P and price is currently 19. When not at equilibrium the rate of adjustment of price is 0.08(Qa-Qs) Obtain the time path, P(t)? Does this market have a dynamically stable intertemporal equilibrium price? b) Use the solution you obtained in (a) to explain how close price will be to its equilibrium value after seven time periods. a) dP dt

The demand and supply functions in a competitive market are Qa=280-4P and Q, = -35+8P and price is currently 19. When not at equilibrium the rate of adjustment of price is 0.08(Qa-Qs) Obtain the time path, P(t)? Does this market have a dynamically stable intertemporal equilibrium price? b) Use the solution you obtained in (a) to explain how close price will be to its equilibrium value after seven time periods. a) dP dt

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Question Three The demand and supply functions in a competitive market are Qa=280-4P and Qs = -35+8P and price is currently 19. When not at equilibrium the rate of adjustment of price is dP 0.08(Qd-Qs) dt Obtain the time path, P(t)? Does this market have a dynamically stable intertemporal equilibrium price? Use the solution you obtained in (a) to explain how close price will be to its equilibrium value after seven time periods. a) b) =
Transcribed Image Text:Question Three The demand and supply functions in a competitive market are Qa=280-4P and Qs = -35+8P and price is currently 19. When not at equilibrium the rate of adjustment of price is dP 0.08(Qd-Qs) dt Obtain the time path, P(t)? Does this market have a dynamically stable intertemporal equilibrium price? Use the solution you obtained in (a) to explain how close price will be to its equilibrium value after seven time periods. a) b) =
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