Economics · Mathematical Economics

In a market model with a 'lagged' supply function (lagging by one time period), the convergence of the time path of price towards the equilibrium price depends on:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1It has nothing to do with the slopes of the demand and/or supply functions
2Whether the absolute slope of the supply function = the absolute slope of the demand function
3Whether the absolute slope of the supply function < the absolute slope of the demand function✓
4Whether the absolute slope of the supply function > the absolute slope of the demand function

Correct answer

Whether the absolute slope of the supply function < the absolute slope of the demand function

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