The difference between the general equilibrium and partial equilibrium analysis.
Explanation of Solution
Partial equilibrium analysis is one which deals with the
General equilibrium analysis: The general equilibrium analysis is the determination of equilibrium in all the related markets, when the simultaneous equilibrium is determined by considering the feedback effects.
Partial equilibrium analysis: The partial equilibrium analysis is done when the equilibrium in a single market is determined without consideration of the feedback effects.
Want to see more full solutions like this?
Chapter 16 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
- Evan goes out drinking every Thursday night, even though he tends to show up late for work and hung over on Friday. Why might Evan’s friends consider this behavior irrational? Why might an economist consider Evan’s behavior economically rational?arrow_forwardWhat is agent theory?arrow_forwardWhat is an equilibrium condition? How do we that we have an equilibrium condition?arrow_forward
- Come up with an example with four agents and four items in which there is only one Pareto efficient allocationarrow_forwarda) Suppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4. Suppose 60 TL tax is imposed on each unit of X that is purchased. What is the burden of the tax? Explain the key factors that determine the incidence of the tax. b) Describe the main differences between partial and general equilibrium analysis in the context of examining tax incidence.arrow_forwardWhy social optimal output more beneficial to society?arrow_forward
- Discuss Simon’s concept of “bounded rationality.”arrow_forwardWhat is the difference between static and dynamic analysis in economics? When is each appropriate?arrow_forwardDifferentiate between an exogenous variable and an endogenous variable in an economic model? Why isn’t it useful to construct an economic model that contains only exogenous variables (and no endogenous variables)?arrow_forward
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning