Application of Differential Equation to Economics

Abstract

In recent years, many Business analyst and Economist discovered the abnormality in price of products or commodities, rather than a fixed price or a little increase, the price increases drastically affecting the demand or supply of goods with respect to time, which in turn inflates the price of such commodities, and affects the various policy alternatives. These problems were modeled into differential equations and the solutions were obtained. With a closer view at the Evans Price Adjustment Model, which is a determinant factor of Price as regards quantity of Demand (t) D and supply (t) S with respect to time t . Variation of time clearly shows that as time increases, price increases, supply increases and demand decreases.