3 Assume that supply in year t depends on price in year t 1, S (Pt 1) a Pt 1 and that demand function is an usual one, D(P) 1 bP (a) (10) Obtain a first order difference equation for p (b) (10) Find the stationary equilibrium price (c) (10) Derive the time path of price (d) (10) What is the condit...

a To obtain a firstorder difference equation for p we need to express the supply and demand functions in terms of price at time t rather than time t1 Supply function SPt1 aPt1 Demand function ...

3. Assume that supply in year t depends on price in year t-1, S (Pt-1)= a...

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Microeconomics An Intuitive Approach with Calculus

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3. Assume that supply in year t depends on price in year t-1, S (Pt-1)= a...

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a To obtain a firstorder difference equation for p we need to express the supply and demand functions in terms of price at time t rather than time t1 Supply function SPt1 aPt1 Demand function ... View the full answer

Microeconomics An Intuitive Approach with Calculus

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