johnnyhenderson replied

418 weeks ago

Let us look at A
On the left of A Demand > SS
So prices will rise and settle with A but if something happens exogenously and we are between the point A and B supply is greater than demand so prices will fall and we will settle down at B.
Now something happens exogenously and we are between B and C here Demand is greater than supply so prices will rise and we will reach B again. So B is a stable equilibrium.
If we look at the right of point C supply is greater than dd so prices will fall and we will reach C again.
But only B is stable from both sides

Please Help.
Thanks !
I didn't find the right solution from the internet.

References:
- http://discussion-forum.2150183.n2.nabble.com/Stable-vs-unstable-equilibrium-td7605759.html
- Cloud Overview Video Examples
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