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Consider the market for potatoes, which are storable intra-seasonally (but not inter-seasonally). In this market, the harvest is entirely consumed over three periods, t 1,2,
Consider the market for potatoes, which are storable intra-seasonally (but not inter-seasonally). In this market, the harvest is entirely consumed over three periods, t 1,2, 3. Potatoes can be stored at (marginal) cost K per potato/period. Denoting initial supply by s and consumption in period t by G, the market equilibrium requires that: Competition among storers, who have perfect foresight about future prices, eliminates inter-period arbi trage opportunities. Thus and where Pt is the equilibrium price in period t, K-0.1 is per-period unit cost of storage, and -0.9 is per-period discount factor. The demand function, which is assumed to be the same across periods, is given 4 (a) Write a Python code to compute the equilibrium prices for periods 1, 2 and 3 when s-1, s 2, and s 3. Report the values and comment. (b) Now solve the model when 0.2 and s-1. Report the equilibrium values and comment. (c) Now solve the model when K-0.1, s-1 and 0.5 . Report the equilibrium values and comment. Consider the market for potatoes, which are storable intra-seasonally (but not inter-seasonally). In this market, the harvest is entirely consumed over three periods, t 1,2, 3. Potatoes can be stored at (marginal) cost K per potato/period. Denoting initial supply by s and consumption in period t by G, the market equilibrium requires that: Competition among storers, who have perfect foresight about future prices, eliminates inter-period arbi trage opportunities. Thus and where Pt is the equilibrium price in period t, K-0.1 is per-period unit cost of storage, and -0.9 is per-period discount factor. The demand function, which is assumed to be the same across periods, is given 4 (a) Write a Python code to compute the equilibrium prices for periods 1, 2 and 3 when s-1, s 2, and s 3. Report the values and comment. (b) Now solve the model when 0.2 and s-1. Report the equilibrium values and comment. (c) Now solve the model when K-0.1, s-1 and 0.5 . Report the equilibrium values and comment
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