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In a market where Qd t = 88 0.2Pt and Qs t = 10 + 0.8Pt1, quantity unexpectedly drops from its equilibrium value to 68.39.

In a market where Qd t = 88 0.2Pt and Qs t = 10 + 0.8Pt1, quantity unexpectedly drops from its equilibrium value to 68.39. a) Derive the difference equation which will calculate price in the time periods following this event. b) Find the solution of the difference equation from part a). c) Is the long-run equilibrium price stable or unstable? Show work! d) How long will it take for the market to collapse completely?

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