Derive the difference equation which will calculate price

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Question: 1. In a market where

Qd1 = 160 - 20Pt and Qst = -80 + 40Pt-1

quantity unexpectedly drops from its equilibrium value to 75. Derive the difference equation which will calculate price in the time periods following this event.

2. If Qdt = 180 - 0.9Pt and Qst = -24 + 0.8Pt-1 say whether or not the long-run equilibrium price is stable and then use the difference equation method to calculate price in the thirtieth time period after a sudden one-off increase in quantity to 117.

Reference no: EM131482439

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