Question #8a32c
1 Answer
Oct 15, 2015
We can say equilibrium forms the basis of Micro Economic Analysis.
Explanation:
In developing the theory, the economists have used equilibrium analysis. They discuss how each economic unit is moving towards equilibrium.
In consumption, the consumer is in equilibrium when he equates MU with price. This forms the basis of Law of Demand.
In production the producer is in equilibrium when he minimizes his cost.
The Market is equilibrium when demand is equal to supply.
Under Exchange the firm is equilibrium, when a firm equates its Marginal Product with the Marginal Cost.
I Macro also we proceed with the equilibrium income determination.
