Discuss the static stability and dynamic stability for the following d

Question

Discuss the static stability and dynamic stability for the following demand and supply functions

$D_{t}=-0.2p_{t}+80$

$S_{t}=0.3p_{t}+40$

18 Feb 2025

Answer :

Word Count : 359

To analyze static stability and dynamic stability, we first determine the equilibrium price and quantity and then evaluate stability conditions. ### 1. Finding the Equilibrium Price and Quantity The market equilibrium occurs where demand ($ D_t $) equals supply ($ S_t $): \[ -0.2p_t + 80 = 0.3p_t + 40 \] Solving for $ p_t $: \[ 80 - ________ ___ _______ _________ ______ ______ ___ ___.
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