PAPM 1000 Lecture Notes - Lecture 7: General Equilibrium Theory, Perfect Competition, Walrasian Auction

• School: Carleton University
• Department: Public Affairs and Policy Management
• Course: PAPM 1000
• Professor: Marc Andre Gagnon

Document Summary

Why the free market is great in theory. Free markets have the view that free individuals are the way to go. What to produce, when to produce it, how, how much to sell it for, is all determined by individuals, no central authority. Microeconomics shows how people maximize their utility (determining equilibrium) and the normative judgement of the social outcomes of free markets. Economic decisions are what to produce (supply) and what to consume (demand) Leon walras (1834-1910) looked into general equilibrium as the formalized invisible hand, putting market economy into perspective, coming up with the walrasian model, and analyzing outcomes of an economy like this. Walras--> society is no picnic! in free markets if you are weak, too bad! You need to work to live and if you can"t, well you deserve your fate. Wrote pure economics (arguing pure theory), social economics (ethics of economic outcomes), and applied economics (case studies/examples)