Given demand function: Qdt = 1200 - 6Pt

Here's a step-by-step solution for the market analysis:

Given demand function: $Qd_t = 1200 - 6P_t$ Given supply function: $Qs_t = 300 + 4P_{t-1}$

i) Determine the equilibrium condition of the market

Step 1: Set demand equal to supply to find the equilibrium price $P_e$. At equilibrium, $Qd_t = Qs_t$ and $P_t = P_{t-1} = P_e$. $1200 - 6P_e = 300 + 4P_e$

Step 2: Solve for $P_e$. $1200 - 300 = 4P_e + 6P_e$ $900 = 10P_e$ $P_e = \frac{900}{10}$ $P_e = 90$ The equilibrium price is N90.

Step 3: Substitute $P_e$ into either the demand or supply equation to find the equilibrium quantity $Q_e$. Using the demand equation: $Q_e = 1200 - 6(90)$ $Q_e = 1200 - 540$ $Q_e = 660$ The equilibrium quantity is 660 units.

The equilibrium condition of the market is:

• Equilibrium Price ($P_e$): $\boxed{N90}$
• Equilibrium Quantity ($Q_e$): $\boxed{660 units}$

ii) Determine the stability condition of the market

Step 1: Derive the dynamic price equation by setting $Qd_t = Qs_t$. $1200 - 6P_t = 300 + 4P_{t-1}$ Rearrange the equation to express $P_t$ in terms of $P_{t-1}$: $6P_t = 1200 - 300 - 4P_{t-1}$ $6P_t = 900 - 4P_{t-1}$ $P_t = \frac{900}{6} - \frac{4}{6}P_{t-1}$ $P_t = 150 - \frac{2}{3}P_{t-1}$

Step 2: Identify the coefficient of $P_{t-1}$ and check the stability condition. The dynamic equation is in the form $P_t = A + \lambda P_{t-1}$, where $\lambda$