Imagine an economy with a single market in continuous time: Here, T is a large number...
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Imagine an economy with a single market in continuous time: Here, T is a large number that represents the end of history. Suppose that the dynamics of the price satisfy pt = a (d(pt) - 5), with a > 0, where d(p) is the demand function, and 5 > 0 is the fixed supply of the commodity. € [0, T]. • Interpret the differential equation given above. Suppose that there exists a unique price level p* >0 such that d(p*) = s Write down a solution for p* which would be true for any d() function? • What is it that ensures the stability of the price mechanism in this model? Discuss. Imagine an economy with a single market in continuous time: Here, T is a large number that represents the end of history. Suppose that the dynamics of the price satisfy pt = a (d(pt) - 5), with a > 0, where d(p) is the demand function, and 5 > 0 is the fixed supply of the commodity. € [0, T]. • Interpret the differential equation given above. Suppose that there exists a unique price level p* >0 such that d(p*) = s Write down a solution for p* which would be true for any d() function? • What is it that ensures the stability of the price mechanism in this model? Discuss.
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Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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