(i) In case (a), prices alternate above and below but converge to the equi¬librium pricep*. In economics lingo, the pricep* is considered “stable”; in mathematics, we refer to it as “asymptotically stable” (Figure 1.9).(ii) In case (b), prices oscillate between two values only. If p(0) = p0, then p(1) = -p0 + B and p(2) = p0. Hence the equilibrium point p* is stable (Figure 1.10).(iii) In case (c), prices oscillate infinitely about the equilibrium point p* but progressively move further away from it. Thus, the equilibrium point is considered unstable (Figure 1.11).
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