Which of the following statements is incorrect?
A)A partial equilibrium analysis studies the determination of price and output in a single market.
B)A general equilibrium analysis studies the determination of price and output in more than one market simultaneously.
C)A partial equilibrium analysis ignores either consumers or producers in the analysis and looks only at one-half of the market.
D)A general equilibrium analysis would be useful to study two goods that are linked in some way, such as complementary or substitutable goods.

Question

Quizplus · Accepted Answer

A partial equilibrium analysis does not ignore either consumers or producers in the analysis. It analyzes the interplay between supply and demand in a specific market while assuming that all other markets remain constant. A partial equilibrium analysis does not necessarily ignore either consumers or producers, rather it focuses on a specific market and assumes that all other markets are unaffected. Therefore, statement C is incorrect.

Which of the Following Statements Is Incorrect