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The cobweb theorem is an economic model used to explain how small economic shocks can become amplified by the behavior of producers. The equilibrium price is at the intersection of the supply and demand curves. A poor harvest in period 1 means supply falls to Q1 so that prices rise to P1. If producers plan their period 2 production under the 4 Discrete Dynamics in Nature and Society According to the previous considerations, demand and supply are given by D t 1 D p t 1 a bp t 1, S t 1 S Pe t c dPe t e Pe t 2, 2.1 where D t 1, S t 1 are, respectively, the amount of goods demanded by consumers and the amount of goods supplied by the entrepreneurs at time t 1; and a,b,c,d,eare real constants such that b<0, d>0ande<0.In our model p The cobweb model or cobweb theory is an economic model that explains why prices might be subject to periodic fluctuations in certain types of markets.It describes cyclical supply and demand in a market where the amount produced must be chosen before prices are observed. Producers' expectations about prices are assumed to be based on observations of previous prices. The Cobweb Model challenges the tendency to assume that a supply and demand model "obviously" converges to equilibrium at the intersection of the two curves. In fact, convergence to equilibrium in an economic model may or may not occur. The mechanism featured in the Cobweb Model is a lagged response of supply to the market price. For example, in an agricultural crop this period's supply