7 (b) On the floor of stock exchange traders meet to buy and sell stocks of various companies. Suppose the change in quantity sold of a particular stock depends on the gap between offer price PD and the asking price PS. In particular, assume that q = (PD-PS). The inverse-demand function of the buyer is PD = a + bq And the inverse supply function of the seller is ps = g + hq. If the initial price at t=0 is Po, find the equilibrium quantity sold in this market. Find the quantity sold as a function of time. What conditions must hold for this equilibrium to be stable.

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