General equilibrium Flashcards
1
Q
What is welfare economics used to analyse?
A
- Taxation
- Subsidy
- Trade liberalisation
- Infrastructure projects
2
Q
General equilibrium is when all markets:
A
Clear simultaneously
3
Q
What’s an example of the knock on effect of general equilibrium?
A
Demand for shoes can affect the demand for shoemakers, and labour markets
4
Q
If any one market is is distorted by tax, quantity constraints or imperfect competition, intervention in any other market may:
A
Improve welfare
5
Q
A market is said to clear when:
A
Total demand = total endowments
