An economic model for the supply S(P) and demand D(P) of a product at a market price
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An economic model for the supply S(P) and demand D(P) of a product at a market price of P is given by
(so that supply lags behind demand by 1 time unit). Show that
Find the particular solution of the recurrence relation corresponding to P0 = 0.8 and sketch it in a cobweb diagram. What is the steady state price of the product?
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