If the demand and supply functions in a competitive market are
Qd = 50 − 0.2P
Qs = −10 + 0.3P
and the rate of adjustment of price when the market is out of equilibrium is
dP /dt = 0.4(Qd − Qs)
derive and solve the relevant difference equation to get a function for P in terms of t given
that price is 100 in time period 0. Comment on the stability of this market

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