Question
Consider the following dynamic supply-demand model: Qd(t)=40-2p(t)-2p'(t)-p''(t) Qs(t)=-4+2p(t) In the above, p(t) denotes price in time t, Qd(t) and Qs(t) denote, respectively, quantity demand and
Consider the following dynamic supply-demand model:
Qd(t)=40-2p(t)-2p'(t)-p''(t)
Qs(t)=-4+2p(t)
In the above, p(t) denotes price in time t, Qd(t) and Qs(t) denote, respectively, quantity demand and quantity supplied in time t.
(a)Use the above system to derive a differential equation in p(t).
(b)Find the general solution for p(t).
(c)Does the limit of p(t) exist?
Step by Step Solution
3.49 Rating (152 Votes )
There are 3 Steps involved in it
Step: 1
a To derive a differential equation in pt we need to equate the quantity demanded Qdt t...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Fixed Income Securities Valuation Risk and Risk Management
Authors: Pietro Veronesi
1st edition
0470109106, 978-0470109106
