Consider a competitive market in which price adjusts to excess demand or supply and firms enter and exit the industry if profits or losses are being made. Price adjusts to excess demand according to ?? ?? = 0.5(?& ? ?') Where ?& = 30 ? 2? is the demand function, ?' = 2? is the supply function, p is price, N is the number of firms in the industry and ? is the speed of adjustment coefficient. The number of firms adjust according to ?? ?? = 5 4 (? ? 10) (i) Derive a system of differential equation to represent this information. (5 marks) (ii)SOlve the system.

Consider a competitive market in which price adjusts to excess demand or supply and rms enter and exit the industry if prots or losses are being made. Price adjusts to excess demand according to dp D s E-D-Mq Q) Where q\" = 30 2p is the demand function, q5 = 2N is the supply function, p is price, N is the number of rms in the industry and o: is the speed of adjustment coefcient. The number of rms adjust according to [EN 5 E: ECP 10) Derive a system of differential equation to represent this information. Solve the system