Develop the stock-flow dynamic model of the following scenario: Production is dependent on how many production...

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Develop the stock-flow dynamic model of the following scenario: Production is dependent on how many production plants we have. Initially we have zero production plants but it increases over time through addition of new production plants and decreases over time through deterioration with a rate of 5%. The addition of new production plants is done through investments. Investments are financed by credits and reinvested profits. We can only do investments if we have more net revenues than our dept payements. Revenues depend on sales and price factor. Sales in this model is equal to production. And the price factor is modeled as a function of production over demand. Debt decreases via repayments and increases through new credits and through additional debt due to interest payments (added if interest payments exceed revenues). You must also write down all stock flow equations to get credit. Develop the stock-flow dynamic model of the following scenario: Production is dependent on how many production plants we have. Initially we have zero production plants but it increases over time through addition of new production plants and decreases over time through deterioration with a rate of 5%. The addition of new production plants is done through investments. Investments are financed by credits and reinvested profits. We can only do investments if we have more net revenues than our dept payements. Revenues depend on sales and price factor. Sales in this model is equal to production. And the price factor is modeled as a function of production over demand. Debt decreases via repayments and increases through new credits and through additional debt due to interest payments (added if interest payments exceed revenues). You must also write down all stock flow equations to get credit.

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To develop the stockflow dynamic model for the scenario described we should first identify our stocks flows and auxiliary variables and then construct the differential equations that describe the syst... View the full answer