Which of the following is true of general equilibrium analysis?
A)It is useful for analyzing markets when changes are initiated in one market and repercussions are almost nonexistent.
B)It considers the impact of a change in government policy on a market in isolation.
C)It is useful for analyzing markets when changes are initiated in one market but they affect prices and output in other markets.
D)It is useful for analyzing market conditions when there is no mutual interdependence among markets.

Question

Quizplus · Accepted Answer

General equilibrium analysis is useful for analyzing markets when changes are initiated in one market but they affect prices and output in other markets. It considers the interdependence of markets and how changes in one market can have ripple effects throughout the economy. Choices A, B, and D are incorrect as they do not accurately describe the purpose or usefulness of general equilibrium analysis.

Which of the Following Is True of General Equilibrium Analysis