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Sriram , asked a question
Subject: Economics , asked on 24/11/13

What is the difference between Partial equilibrium and General equilibrium?

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Jayshree From Kvs, added an answer, on 27/11/13
74 helpful votes in Economics

my first answer is not appearing properly,you can refer this one

Partial Equilibrium

1)Developed byAlfred Marshall

2)Related to single variable

3)Based on two assumptions:

  1. Ceteris Paribus
  2. Other sectors are not affected due to change in one sector

4)Other things remaining constant, price of a good is determined

General Equilibrium

Léon Walraswas first to develop it.

More than one variable or economy as a whole is taken into consideration

It is based on the assumption that various sectors are mutually interdependent.

There is an effect on other sectors due to change in one.

Prices of goods are determined simultaneously and mutually.

Hence all product and factor markets are simultaneously in equilibrium.

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Jayshree From Kvs, added an answer, on 24/11/13
74 helpful votes in Economics
Partial EquilibriumGeneral Equilibrium Developed byAlfred Marshall.Léon Walraswas first to develop it. Related to single variable More than one variable or economy as a whole is taken into consideration Based on two assumptions:
  1. Ceteris Paribus
  2. Other sectors are not affected due to change in one sector.
It is based on the assumption that various sectors are mutually interdependent.

There is an effect on other sectors due to change in one.

Other things remaining constant, price of a good is determinedPrices of goods are determined simultaneously and mutually.

Hence all product and factor markets are simultaneously in equilibrium.

  • Was this answer helpful?
  • 1
100% users found this answer helpful.