Microeconomics by Whitehead Judy A

Author:Whitehead, Judy A.
Language: eng
Format: epub
ISBN: 9781135266226
Publisher: Taylor & Francis (CAM)

Applying the solution formula for a first-order difference equation

The solution to this first-order difference equation may be derived from the proven mathematical formula for the general solution to a first-order differential equation as set out below. This is simply borrowed from the discipline of mathematics and applied here.

The standard formula considers a first-order difference equation of the form:

where a and b are constants.

Initializing the value of yt as y0 when t = 0, the solution equation is arrived at through a series of iterations and the solution of the first-order difference equation of the form above is given by the formula:

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