Consider the supply and demand equations: QSt = 0.4Pt-1-5
QDt = -0.8Pt + 55
a/ Assuming that the equilibrium conditions prevail, find an expression for Pt and Qt when P0= 75;
b/ Is this system stable or unstable, explain why?
EXPERT ANSWER
Consider the supply and demand equations: QSt = 0.4Pt-1-5
QDt = -0.8Pt + 55
a/ Assuming that the equilibrium conditions prevail, find an expression for Pt and Qt when P0= 75;
b/ Is this system stable or unstable, explain why?