Distinguish between the following
Partial equilibrium and general equilibrium
ANSWER:
Basis of Difference
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Partial Equilibrium
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General Equilibrium
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1. Definition
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Partial equilibrium refers to equilibrium in one market, assuming that there is no change in other markets
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General equilibrium is the method of studying equilibrium in different markets simultaneously.
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2. Uses
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It is used in microeconomics.
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It is used in macroeconomics.
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3. Assumption
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It assumes that other things remain constant.
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It assumes that the variables are dependent on each other.
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4. Process
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It isolates an individual unit from other forces.
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It explains the inter relationship and interdependence between aggregate economic variables.
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