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68. given the market model with demand and supply functions as under d= ap,+b a <0 sapt-1+b a>0 the condition for stable equilibrium here will b (2) laa (4) a (
68. Given the Market model with Demand and supply functions as under D= ap,+b a <0 SAPt-1+B A>0 The condition for stable equilibrium here will b (2) laA (4) A (1) a < A (3)
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Nidhi taparia![best-answer]()
Option (3) is correct. Equilibrium in the market is said to be stable when - 1. D is downward sloping and S is upward sloping, or 2. Both D and S are downward sloping, but supply curve is less elastic than demand curve (supply curve is flatter than demand curve). So keeping the model given above as static (ignoring the t or time element in price), we can calculate the slopes of both D and S. slope of D = a slope of S = A a > A or |1/a| < |1/A| (Taking absolute value and reciprocalling)