ECON 208 Chapter Notes -Pearson Education, Macroeconomics, Toshiyori

• School: McGill University
• Department: Economics (Arts)
• Course: ECON 208
• Professor: Wendy Dickinson

Document Summary

In chapter 5 we explain the difference between partial-equilibrium and general- equilibrium analysis. Here we provide some detailed examples of how markets are linked together. There are three broad reasons that markets may be connected regional link- ages, input output linkages, and linkages through resource constraints. In the first, mobile supply is what links the markets; in the second, the linkage is provided by mobile demand. Mobile supply by mobility of supply we mean the ease with which suppliers can move their products from one market to another. This mobility depends on the product in question and the distance between the two markets. If the product is very costly to transport (like gravel or cement) and the markets are far apart (like british columbia and. Nova scotia) then the two markets will be separate. But if the product is inexpensive to transport (like computer chips or leather gloves) and the markets are close together (like.