In a competitive market price where \( Q_d = 500 - 5P \) and \( Q_s = 40 + 20P \) , the initial price P(0) is Rs 50. (a) Derive a function for the…
BBA Business Mathematics II · 2024 · Solved Question with Answer
In a competitive market price where \( Q_d = 500 - 5P \) and \( Q_s = 40 + 20P \) , the initial price P(0) is Rs 50.
(a) Derive a function for the time-path of P and use it to predict price in time period 5 given that price adjusts in proportion to excess demand at the rate \( \frac{dP}{dt} = 0.01 (Q_d - Q_s) \).
(b) How many time periods would you have to wait for the price to drop by Rs. 30?