Economics 1021A/B Study Guide - Quiz Guide: Walrasian Auction, Market Clearing, Shortage

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: bruce hammond

Document Summary

The price is then set where total demand across all agents equals the total supply for the good. Prices are lowered for goods with positive prices and excess supply. The equation tells us that supply equals demand in equilibrium with the exception of free goods, that occur when there is excess supply at an equilibrium price of zero. Here we are looking only at the market for good k with prices of all other goods held fixed: general equilibrium analysis: looks at full adjustment of prices so supply equals demand in all markets. Example: all prices enter the supply and demand functions for good i not just the price of i. State socialism: government ownership of all or specific sectors of the economy for purposes of achieving overall social objectives rather than profit (ex. Soviet union: can also occur within capitalist framework (ex.