17.9 Suppose the demand curve for corn at time t is given by Qt
100 2Pt and supply in period t is given by Qt
70 E(Pt), where E(Pt) is what suppliers expect the price to be in period t.

a. If in equilibrium E(Pt)
Pt, what are the price and quantity of corn in this market?

b. Suppose suppliers are myopic and use last period’s price as their expectation of this year’s price [that is, E(Pt)
Pt 1]. If the initial market price of corn is $8, how long will it take for price to get within $.25 of the equilibrium price?

c. If farmers have “rational” expectations, how would they choose E(Pt)?