The difference between the general equilibrium and partial equilibrium analysis.
Explanation of Solution
Partial equilibrium analysis is one which deals with the supply and demand interactions in a single market. However, in a partial analysis, the impact of changes in one market on the interrelated markets is ignored. On the other hand, a general equilibrium analysis is concerned with the impact of the whole markets which are interrelated. In reality, the changes in the price and quantity of one market influence the price and quantity of other markets. The feedback effects can lead to an accurate
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.
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Chapter 16 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
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Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
