In this article we will discuss about the market equilibrium in the Marshallian sense. Suppose, the demand and supply functions for a commodity are: qd = φ(pd) (4.18) and qs = Ψ(ps) (4.19) where pd and ps denote the demand price and supply price, respectively. It can be called the inverse of the demand and supply functions (4.18) and (4.19) [...]
The below mentioned article provides notes on the dynamic stability of market equilibrium. Market equilibrium is stable in the dynamic sense if the price converges to the equilibrium price over time; it is unstable if the price moves away from the equilibrium over time. The dynamic analysis of the stability of equilibrium tries to find out the course of price [...]
In this article we will discuss about the definition and conditions for static stability. Definition of Static Stability: In Fig. 4.1, the market equilibrium is obtained at the point E0 (p0, q0). Suppose now that the market is disturbed by a rightward shift of the demand curve from D0D0 to D1D1. Because of this disturbance, quantity demanded (qd) becomes larger [...]