Answered: Assume that the respective demand and…

Assume that the respective demand and supply functions for a product are Q = 50 – 0.5P; and Q = -Pt + 2Pt-1 , where P is the price. (a) Find the time path of price if P, = 1.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Kenesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section10.3: The Simple Keynesian Model In The Ad-as Framework

Problem 3ST

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Question

(b) Is this market stable or unstable? Justify your answer.

Assume that the respective demand and supply functions for a product are Q = 50 – 0.5P, and
Qi = -Pt + 2Pt-1 , where P is the price.
(a) Find the time path of price if Po = 1.

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