Questions tagged [general-equilibrium]

In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an overall (or "general") equilibrium.

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Stimulus Effect of the Minimum Wage

In the question about the minimum wage found here, I have heard several times that an increase in the minimum wage can, as one of several competing effects, "boost the economy" by increasing the ...
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Would a very cheap renewable energy source be harmful economically?

This question is not on whether these devices work or not but so much as if they did work. What if electricity can be made so cheap that everyone could afford it ti the point there was no demand for ...
Muze's user avatar
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Simulating Real Business Cycle

Basically I need to replicate Hartley's 'A User's Guide to Solving Real Business Cycle Models' (http://www.econ.ucdavis.edu/faculty/kdsalyer/LECTURES/Ecn235a/Linearization/ugfinal.pdf). Specifically, ...
Sarunas's user avatar
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"Competitive equilibrium" vs. "General equilibrium"

What is the difference between the term "competitive equilibrium" and the term "general equilibrium"? Here in econ.SE, they are two different tags, so there is probably a difference between them, but ...
Erel Segal-Halevi's user avatar
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2 answers
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Does a General Equilibrium here require Pareto Optimality?

There are two consumers $A$ and $B$, and two producers $X$ and $Y$. he consumers are endowed with labour(L) and capital(K) $L_A,K_A$, and $L_B,K_B$ respectively. The preferences of the two consumers ...
freebird's user avatar
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Modelling Pay what you want

I have been trying to model a Pay What you Want scheme. Now, for a monopoly it is clear that monopoly will have more profit by setting monopoly pricing assuming all players are selfish. But consider a ...
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How to find the contract curve when both agents have linear utilities?

I'm trying to solve the following excercise: Find the contract curve for an exchange economy where agents' ($A$ and $B$) preferences and endowments are given by: $u_A = x_A + y_A$ $u_B = s x_A + y_A$ $...
Nicolas Torres's user avatar
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Equilibrium price and quantity - consumer and producer surplus

Inverse function of market demand for certain good is equal to $P=100-0.25Q$, inverse supply function is $P=20+0.55Q$. Calculate equilibrium price and quantity. Furthermore calculate consumer and ...
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The second welfare theorem without monotonicity

Are there non monotonic preferences that are strictly convex and continues but the second welfare theorem does not hold for them?
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Uniqueness of utilities in competitive equilibrium

Suppose several traders are given some initial endowment of goods. Then, a free market opens and they trade until the market is at a competitive equilibrium. Each trader now has a final utility which ...
Erel Segal-Halevi's user avatar
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Looking for discussion on equilibrium vs dynamic models in econometrics

I'm a statistician/machine learning scientist more familiar with molecular bio than economics. Trying to find out if an issue I perceive in bio modeling also occurs in econometric modeling. A common ...
Count Zero's user avatar
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What does it mean when an economist talks about "equilibrium"

In economics, there are many equilibrium concepts, like equilibrium under perfect competition, Monopolist equilibrium, competitive equilibrium, general equilibrium, nash equilibrium, equilibrium price,...
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In a box diagram, why does efficiency locus lie on one side of the diagonal, if both sectors haves constant returns to scale function?

The following is what I understand, so far. If we measure labour in the $x$-axis and capital in the $y$-axis, the slope of diagonal of the box is the capital-labour ratio $K/L$ in the economy. Let $A$ ...
Shaikh Ammar's user avatar
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Finding Walrasian equilibria when Walrasian demands are not unique

I'm trying to solve the following excercise: Find the Walrasian equilibria for a pure exchange economy where agents' ($A$ and $B$) preferences and endowments are given by: $u_A = x_A + y_A$ $u_B = 2 ...
Nicolas Torres's user avatar
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How does demand-supply equilibrium interact with profit maximisation?

My understanding of supply and demand is that at higher prices sellers are more willing to supply and buyers will demand less, and the total transaction volume will be supply or demand, whichever is ...
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market equilibrium quantity $\ne$ firm profit maximising quantity?

Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit maximising quantity $Q_f$ as illustrated below: I guess any firm in the market would ...
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Solve for the steady state with CRS Cobb-Douglas, problem with the system of equations

There is one agent with utility function given by: \begin{equation} U(c,l) = \frac{c^{1-\sigma}}{1-\sigma}-\frac{l^{1+\gamma}}{1+\gamma}\tag{1} \end{equation} With budget constraint: \begin{...
Tecon's user avatar
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Macroeconomics and microeconomics

Can we say macroeconomics is top down approach and microeconomics is bottom up approach .Is there any relation/connection between macroeconomics and microeconomics.
quanity's user avatar
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What are the best theoretical or empirical defenses of equilibrium analysis in economics?

An Anarchist FAQ (see Wikipedia page here) focuses its opposition to mainstream economics by criticizing equilibrium analysis. The FAQ notes that, [Equilibrium analysis] is essentially a static tool ...
Matthew Barnett's user avatar
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Why incomes should decline in equilibrium state

According to Keynes, the prosperity of a population is measured by the aggregated income of each individual. Spending this income keeps the economy away from a depression. If there is too much ...
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Why did economic forecasters get inflations predictions so wrong?

I come from more of a statistics and applied math background, but I am interested in issues of social science. I have been trying to understand why economic forecasters or forecast models seems to ...
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