Cobweb Model

Question 1

Who developed the Cobweb model?

Answer 1

Nicholus Kaldo

Question 2

What year was the cobweb model developed?

Answer 2

1934

Question 3

What is the cobweb model?

Answer 3

It is an economic model that shows why prices may be subjected to periodic fluctuation in certain types of markets.

Question 4

Mention the Assumptions of the Cobweb model

Answer 4

• It focuses on the law of demand
• It focuses on the law of supply
• The previous price determines the present supply. Pt -1= St, where Pt is Previous Price and St is Present supply
• The previous price also determines the present demand. Pt-1= Dt, Pt -1= Previous Price, Dt = Present demand

Question 5

Mention the uses of the Cobweb Model

Answer 5

• It is used to study fluctuations in the areas of demand and supply
• It helps to understand the fluctuations in market prices.
• It is used for planning.