Demand and supply for a particular product depend on current price. Sellers determine future price on...

 

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Demand and supply for a particular product depend on current price. Sellers determine future price on the basis of current price and excess demand. If excess demand increases, they raise price, while in the opposite case, they lower it. Find the time path of price if the specific forms of the functions are q=100-5p₁ q = -80+10p, P₁+1=P₁ +0.1(q-q;) Demand and supply for a particular product depend on current price. Sellers determine future price on the basis of current price and excess demand. If excess demand increases, they raise price, while in the opposite case, they lower it. Find the time path of price if the specific forms of the functions are q=100-5p₁ q = -80+10p, P₁+1=P₁ +0.1(q-q;)

Answer rating: 100% (QA)

In a state of equilibrium the quantity demanded q and the quantity supplied q are equal Therefore we can set the two equations equal 100 5p 80 10p Solve for Price Lets find the equilibrium price p by ... View the full answer