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Questions and Answers
What is the focus of general equilibrium analysis?
What is the focus of general equilibrium analysis?
- Consumer behavior
- Individual markets
- Government intervention
- The economy as a whole (correct)
What does general equilibrium analysis show?
What does general equilibrium analysis show?
- How to maximize profit in a single market
- How to regulate prices in different markets
- How supply and demand interact in an economy of multiple markets (correct)
- How to create a monopoly in a specific industry
Who is credited with introducing and developing the general equilibrium theory?
Who is credited with introducing and developing the general equilibrium theory?
- John Maynard Keynes
- Adam Smith
- Leon Walras (correct)
- Milton Friedman
In general equilibrium analysis, what does the balance of competing levels of supply and demand in different markets ultimately create?
In general equilibrium analysis, what does the balance of competing levels of supply and demand in different markets ultimately create?
What distinguishes general equilibrium analysis from partial equilibrium analysis?
What distinguishes general equilibrium analysis from partial equilibrium analysis?
When did the French economist Leon Walras introduce and develop the general equilibrium theory?
When did the French economist Leon Walras introduce and develop the general equilibrium theory?
Study Notes
General Equilibrium Analysis
- The focus of general equilibrium analysis is on the behavior of supply and demand in multiple markets, which are interconnected.
- General equilibrium analysis shows how the prices of goods and services are determined in all markets, simultaneously, and how these prices affect the behavior of firms and individuals.
- The general equilibrium theory is credited to Leon Walras, a French economist.
Key Features of General Equilibrium Analysis
- The balance of competing levels of supply and demand in different markets ultimately creates a set of prices that clears all markets, leading to a state of general equilibrium.
- What distinguishes general equilibrium analysis from partial equilibrium analysis is that it considers the interactions between multiple markets, rather than just one market.
History of General Equilibrium Theory
- The French economist Leon Walras introduced and developed the general equilibrium theory in the late 19th century.
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Description
Test your understanding of general equilibrium theory with this quiz. Explore how supply and demand interact across multiple markets to create a price equilibrium. Learn about the concepts introduced by French economist Leon Walras and more.
