Equilibrium Between Industries

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Equilibrium Between Industries

This equilibrium would also come to exist between industries, for if wages and profits were higher in one industry than another, people and investment would move until competition had equalized return, made it the same everywhere.

The idea of a general economic equilibrium was the specific refinement of Leon Walras, who lived from the 18303 until 1910 and who was the son of another famous economist, Auguste Waltas.

The younger Walras was a Frenchman and a failed mathematician. He went on to study as a mining engineer, then went on up, academically speaking, to economics and became a professor at the University of Lausanne. His general equilibrium was expressed mathematically, and he is regarded as one of the founders of mathematical economics, which shows you should always keep on trying.

The Wairasian view of the system depended, as did all neoclassical economics, on the competition of many small firms and so on the uninhibited rule of the market. Consumers and producers were, both and all, regulated by prices that none was large enough in the market to control. Monopoly was an exception but only an imperfection that did no general or decisive harm.

Learn More About Market Changes

The Equilibrium System

A reference to equilibrium economics has the same connotation, more or less.

The economic system was seen to resemble the pendulum of an unwound clock.

It could be disturbed by many things, but it would always return to the same position - to the point where the consumer had maximized satisfaction with the best distribution of his or her expenditures and the producer was producing at the most efficient level of output, this being where marginal cost equalled price.

We should also add that everyone or almost everyone would be employed.

For if someone were out of work,... see: The Equilibrium System

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