Problem
1. What is meant by a ‘stable equilibrium'? Draw simple diagrams showing (a) a stable equilibrium; (b) an unstable equilibrium. Is the length of time a system takes to return to an equilibrium position important? If so, why?
2. Would it be sensible always to act as if the weather forecast for the following day were always correct if, on average, weather forecasts were correct:
10 per cent of the time?
50 per cent of the time?
90 per cent of the time?
Does this question provide a reasonable analogy with the notion of analysing an economy as if it were always in equilibrium or as if there were perfect competition? If not, why not?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.