2007-09-15 02:21:14 · 7 answers · asked by oko johnyboyfour 1 in Social Science ➔ Economics
The concept of equilibrium is a over used tool in economics. Equilibrium is the state that closed systems end up in given enough time and maybe a long long time, but a economy is dynamic and can only be considered closed if the entire world is modeled. Worse yet are the theories based on partial equilibrium with the assumption that all else will remain constant much used in introductory classes and public discourse. All or almost all actions from tax increases for raising revenue, to road building for relieving traffic congestion have rebound effects that reduce the estimated changes in behavior. Introducing energy efficient technology results in people buying and using more appliances so the projected saving in energy are not realized. Even among professional economist who take rebound effects account, assume the the economy will move toward equilibrium in a smooth monotonic way. But the theoretical equations that govern economic behavior are non linear and so subject to chaotic behavior.
2007-09-15 03:09:16 · answer #1 · answered by meg 7 · 0⤊ 1⤋
The Concept Of Equilibrium
2016-11-07 10:33:49 · answer #2 · answered by pellenz 4 · 0⤊ 0⤋
Yes, equilibrium is indispensable. It is useful to use "ideal" economic models to understand what policies would lead to optimal economic solutions. For example, what would be the ideal tax rate? The ideal amount of public education?
Without the concept of an equilibrium -- the equalization of supply and demand -- economist could not even start such an investigation.
2007-09-15 04:13:15 · answer #3 · answered by Allan 6 · 0⤊ 0⤋
I have been advocating that there should be a specific science to study nature, properties, composition, laws and classification of wealth. Economics is all about application of wealth for mankind. This study of wealth is a material science and is a mirror image of chemistry. There are two universal laws that apply to all manifestations of the Lord:the matter, ther energy, the wealth and the soul. They simply are properties of the God.
1.Law of Conservation: According to this law matter/energy/wealth/soul can neither be created nor be destroyed but can be changed from one form to another. This law is the mother of Accountancy. This law is the mother of any branch of knowledge. In every step, in economics, we use this law. Income = savings + expenditure, value of demand = value of supply etc are a few examples of this great law. Without this law economics has no existence.
2. Law of Equilibrium: Matter/energy/wealth move from higher concentration to lower concentration till concentration on both sides become equal. Example:
Rs. 5 per Kilo potato (market A)And Rs.6 per kilo potato
(Market B)
In market A potato is more concentrated because 1/5 > 1/6. In Market B money is more concentrated because Rs. 6 is greater than Rs.5. Money moves from Market B to Market A and goods (potato) moves from Market A to Market B.
Law of Conservation is the cause and Laaw of Equilibrium is the effect. Both always operate jointly and neither operates in isolation.
There are practically no exceptions to these Godmade laws. Human behavior has no role to play here.
2007-09-19 00:54:37 · answer #4 · answered by bvgopinath2001 4 · 0⤊ 0⤋
Assuming that your asking our opinions on this title, So, yes, of course.
2007-09-15 02:41:16 · answer #5 · answered by Anonymous · 0⤊ 1⤋
This puzzles me too
2016-07-30 03:13:53 · answer #6 · answered by Martina 3 · 0⤊ 0⤋
thanks to each and every one of you for the replies!
2016-08-24 16:05:03 · answer #7 · answered by Anonymous · 0⤊ 0⤋