Suppose following model is given Qa = k (a constant) Qs = -y + SP; Pt+1 = Pt - o(Qst – Qat) where, all constants (i.e. y,8,0) are non-zero. Analyse the behaviour of price over time. Do we need to have any restriction on k to make the solution economically meaningful?

Suppose following model is given Qa = k (a constant) Qs = -y + SP; Pt+1 = Pt - o(Qst – Qat) where, all constants (i.e. y,8,0) are non-zero. Analyse the behaviour of price over time. Do we need to have any restriction on k to make the solution economically meaningful?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 1.6CE: Estimate the double-log (log linear) time trend model for log cruise ship arrivals against log time....

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