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: r 53 || 200' pg, 5; 2 1D(]' 'l' 210:. (a) Graph the system of equations (xaxis: p; and pf) and calculate the market equi- librium [30*: (22*) assuming that plg E p. Suppose that at time period t = 0, rms produce 50 = 120 units of output. (a) Calculate the price and output for the rst three periods [at = 1: 2, 3) under static expectations. Discuss whether prices converge and why? (b) Calculate the price and output for the rst three periods (t = 15 2, 3) under adap- tive expectations with A = %. Discuss whether prices converge and why