TAILIEUCHUNG - Lecture Microeconomics: Chapter 16 - Besanko, Braeutigam

Lecture Microeconomics (5th edition): Chapter 16 - General equilibrium theory. This chapter presents the following content: General equilibrium – Analysis I, efficiency and perfect competition, general equilibrium – Analysis II. | General Equilibrium Theory Chapter 16 Copyright (c)2014 John Wiley & Sons, Inc. 1 1 Chapter Sixteen Overview General Equilibrium – Analysis I Partial Equilibrium Bias Efficiency and Perfect Competition General Equilibrium – Analysis II The Efficiency if Competition The Edgeworth Box Analysis of Allocation: A Pure Exchange Economy Analysis of Production Chapter Sixteen Copyright (c)2014 John Wiley & Sons, Inc. 2 Chapter Sixteen Partial vs. General Equilibrium If there are spillover effects from one market to another, then the effects of a change in one market on the economy must be analyzed by examining its effect on all markets Copyright (c)2014 John Wiley & Sons, Inc. 3 Chapter Sixteen Partial vs. General Equilibrium Further, many exogenous events (or policy changes) affect many markets simultaneously (example: discovery of a major oil deposit that raises the income of all citizens in an economy and so affects equilibrium in all markets). If we do not take into account all markets in

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