3. In the following market model, P, is price in time t, S and D are...

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3. In the following market model, P, is price in time t, S and D are supply and demand functions. Assume that supply in year t depends on price in year t-1, S (Pt-1) = aPt-1 and that demand function is an usual one, D (Pt) = 1-bPt. (a) Write out a first-order difference equation of p. 3. In the following market model, P, is price in time t, S and D are supply and demand functions. Assume that supply in year t depends on price in year t-1, S (Pt-1) = aPt-1 and that demand function is an usual one, D (Pt) = 1-bPt. (a) Write out a first-order difference equation of p.

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The firstorder difference equation for p can be expressed as follo... View the full answer