I know that equilibrium is a static status in model in which relevant constraints are enough so that it is restrictive to ylied testable implications (From Proffesor N.S.Cheung) while disequilibrium is the opposed.
HOWEVER, STILL I have questions that are important in understand ing it
1. under the condition of disequilibrium (e.g.P>MC in a price raker cost & supply analysis) ,why every conceived outcome is possible
I and I believe, many students still don't understand why disequilibrium (e.g P>MC, Qs>Qd) can't yelid testable implications (i.e. P rises, output rises; P rise,Qd drops) ,COULD ANYONE USING THESE PRATCICAL EXAMPLES TO EXPLAIN TO MES?
2. What is the relationships of equilibrium & testable implication?
3.. Can we try to equalize the 2 desfinitons abt equilibrium that relevant constraints are enough so that it is restrictive to ylied testable implications and there is no tendency yo change (traditional analysis)? IF WE CAN, HOW CAN WE DO SO?
I BELEIVE AFTER ANSWERING THESE QUESTIONS, MOST OF US CAN UNDERSTAND THE CONCEPT OF EQUILINRIUM MORE CLEARLY . WOULD ANYONE WHO REALLY KNOW THE ANSWERS CAN SHOW YOUE GENEROUS TO HELP ME AS THE PUBLIC EXAM IS REALLING COMING?THANKS WITH MY WHOLE LIFE!
2 answers
We can see numerous testable events to see if a dis-equilibrium situation is able to resolve itself and make progress towards an equilibuium outcome.
For example if we see Qs>Qd (e.g. an oversupply of office space). Then one testable hypothesis is "do rents fall when Qs>Qd" A second example, if the price of corn goes sky high, do farmers respond and plant more corn?
I hope this helps.
1 answer