In: Economics
Consider the following market model: Qd t = 10 Qs t = −1 + 2Pt Pt+1 = Pt − 0.1(Qs t − Qd t ) where P is the price, Qd is the quantity demanded, Qs is the quantity supplied and t is time period. Set up a difference equation in terms of market price P, present its general solution, and draw a phase diagram(Cobweb Model).