If an economist is conducting a partial- equilibrium analysis of the market for commuter jets, then he or she is
A) assuming that changes in the prices of substitute goods will not affect the market for commuter jets.
B) assuming that the prices of all other goods are constant.
C) conducting an irresponsible analysis.
D) making an equivalent analysis to a general- equilibrium analysis, but for one market only.
E) accounting for the effects of changes in jet fuel prices in the market for commuter jets.

Question

Quizplus · Accepted Answer

A partial-equilibrium analysis focuses on a specific market and assumes that all other markets and factors remain constant. Therefore, the economist conducting the analysis is assuming that the prices of all other goods are constant.

If an Economist Is Conducting a Partial- Equilibrium Analysis of the Market