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Question below: s=9 for the question Question A.3 (Word Limit: 300 words) Consider two rms named F1 and F2, producing quantities (11' and each day
Question below:
s=9 for the question
Question A.3 (Word Limit: 300 words) Consider two rms named F1 and F2, producing quantities (11' and each day thereafter it adjusts output according to the process: 11,: = q1,t1 +a(qfq1,t_1), where a E (1, 2). Study the resulting dynamic process and compute the time path of the equilibrium price. (iii) Explain carefully whether or not some day(s) is (are) more favorable to purchase this com- modity. (iv) Suppose you have decided to buy this commodity after t = s when you receive your salary, where s=1+the fourth digit of your student number. Explain whether or not there is some day most favorable to make your purchase. [20 marks]
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