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Difference between partial equilibrium and general equilibrium |
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Answer» Partial equilibrium is what you solve for in a supply and demand model. It MEANS there is equilibrium in one MARKET. The price of that good has adjusted so the quantity demanded equals the quantity supplied in the case of a competitive market.General equilibrium means that all MARKETS are in equilibrium. If one market is in partial equilibrium while other markets are not, that equilibrium cannot persist. The prices of other goods will change, which will affect the supply and demand in that market until the economy CONVERGES to a general equilibrium.Explanation: |
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