Description
nextPrice = (demandIntercept-supplyIntercept-supplySlope*previousPrice)/demandSlope.
An economic model specifies how quantities, prices or marginal values relate under stated assumptions. A derivative, reaction function or first-order-condition term is a local model object rather than an empirical finding or complete equilibrium solution.
nextPrice = (demandIntercept-supplyIntercept-supplySlope*previousPrice)/demandSlope.
When to use this tool
Use Cobweb Linear One Period Update when checking one explicit theoretical economic-model relationship.
How to use the tool and how it works
- Enter previousPrice, supplyIntercept, supplySlope, demandIntercept, demandSlope. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read nextPrice. Use the output convention below.
Require positive demandSlope. nextPrice = (demandIntercept-supplyIntercept-supplySlope*previousPrice)/demandSlope.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| previousPrice | Previous Price | Required. Finite number. |
| supplyIntercept | Supply Intercept | Required. Finite number. |
| supplySlope | Supply Slope | Required. Finite number. |
| demandIntercept | Demand Intercept | Required. Finite number. |
| demandSlope | Demand Slope | Required. Finite number; strictly above 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| nextPrice | Next Price | Required. Finite number. |
{
"input": {
"previousPrice": 10,
"supplyIntercept": 5,
"supplySlope": 2,
"demandIntercept": 100,
"demandSlope": 3
},
"output": {
"nextPrice": 25
}
}Limitations and assumptions
- This is one lagged-supply linear cobweb update under the stated equation convention. Negative outputs are retained; convergence, expectations and actual market equilibrium are not established.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Use a complete model, defensible parameter estimates and suitable identification before drawing empirical or policy conclusions.
References
Similar or alternative tools
- Monopoly Linear Demand Marginal Revenue
price = intercept-slope*quantity; marginalRevenue = intercept-2*slope*quantity.
- Cobb Douglas Share Reference Gap
Compare an observed factor-income share with a supplied Cobb-Douglas output elasticity.