Partial equilibrium analysis tends to ignore:
A)the demand side of the product market.
B)the relevance of diminishing returns to a factor used in production.
C)the interrelationships among prices and markets.
D)the supply side of the product market.

Question

Quizplus · Accepted Answer

Partial equilibrium analysis assumes that changes in one market do not affect other related markets. It focuses on analyzing the specific market under consideration, ignoring the interrelationships among prices and markets. This means that it excludes the demand and supply side of the product market, as well as the relevance of diminishing returns to a factor used in production.

Partial Equilibrium Analysis Tends to Ignore