Cobweb Market

SD · 33

Producers plan supply this period from last period's price: Q_s(t)=a+bP(t−1). Buyers respond instantly: Q_d(t)=c−dP(t). Equilibrium picks tomorrow's price. Stable when |b/d|<1.

a supply intercept 2.0

b supply slope 0.80

c demand intercept 10.0

d demand slope 1.00

step n0

price P—

quantity Q—

P*—

|b/d|—

regime—

P(t)Q(t)cobweb