The following equations describe the behaviour exhibited by buyers and sellers for a particular product in...
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The following equations describe the behaviour exhibited by buyers and sellers for a particular product in a specific country: Q = 200 -0.4Pt-1 Q = -40+0.8P Note that Q denotes the quantity demanded, Q is the quantity supplied and P, is price. (a) At the market equilibrium, find the difference equation for price (P.). (4 marks) (b) Find the unique solution for P₁, the long run equilibrium price and quantity, given that Po=$250. (7 marks) (c) Discuss the movement and stability of equilibrium price in the long run. (4 marks) The following equations describe the behaviour exhibited by buyers and sellers for a particular product in a specific country: Q = 200 -0.4Pt-1 Q = -40+0.8P Note that Q denotes the quantity demanded, Q is the quantity supplied and P, is price. (a) At the market equilibrium, find the difference equation for price (P.). (4 marks) (b) Find the unique solution for P₁, the long run equilibrium price and quantity, given that Po=$250. (7 marks) (c) Discuss the movement and stability of equilibrium price in the long run. (4 marks)
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a P 200 04P 1 P 40 08P P 280 b P 250 Q 10 Explanation aP 200 04P 1 P 40 08P P 280 At the equilibrium ... View the full answer
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
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