Consider the following demand and supply functions: Q=24-4 P, demand Q=-6+2 E, P, supply and expectations...
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Consider the following demand and supply functions: Q=24-4 P, demand Q=-6+2 E, P, supply and expectations generator EP=P a) Calculate the long run price and quantity in this market. Justify your answer. b) Is this system a stable or unstable Cobweb model? Justify your answer. c) Beginning at P,=4 and Q=8, calculate three years of prices and quantities in this market. Suppose instead that the demand and supply functions are: Q=24-2P, demand Q=-6+4 E, P, supply d) Repeat questions a) through c) where in c) part you begin with P,=4 and Q=16. Consider the following demand and supply functions: Q=24-4 P, demand Q=-6+2 E, P, supply and expectations generator EP=P a) Calculate the long run price and quantity in this market. Justify your answer. b) Is this system a stable or unstable Cobweb model? Justify your answer. c) Beginning at P,=4 and Q=8, calculate three years of prices and quantities in this market. Suppose instead that the demand and supply functions are: Q=24-2P, demand Q=-6+4 E, P, supply d) Repeat questions a) through c) where in c) part you begin with P,=4 and Q=16.
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Analyzing the Cobweb Model a Long Run Price and Quantity We can find the longrun equilibrium price and quantity by setting the demand Q equal to the s... View the full answer
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