. Cobweb Model: Assume there is a production lag such that rms have to make their decisions at time t 1 on how much output to produce for time t. The market supply and demand curves are then given by the following expressions: Di = 2001013, St = 100+2p. (a) Graph the system of equations (Jr-axis: pt and pf) and calculate the market equi- librium (p', Q\") assuming that p9 E p. Suppose that at time period t = 0, rms produce 80 = 120 units of output. (a) Calculate the price and output for the rst three periods (t = 1, 2, 3) under static expectations. Discuss whether prices converge and why? (b) Calculate the price and output for the rst three periods (t = 1, 2, 3) under adap- tive expectations with A = %. Discuss whether prices converge and why