The Concept of Equilibrium

John Hicks

in Methods of Dynamic Economics

Published in print October 1987 | ISBN: 9780198772873
Published online November 2003 | e-ISBN: 9780191596438 | DOI:
 The Concept of Equilibrium

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This chapter discusses the concept of equilibrium in a static economy. The static economy (in which wants are unchanging, and resources unchanging) is in a state of equilibrium when all the ‘individuals’ in it are choosing those quantities, which, out of the alternatives available to them, they prefer to produce and to consume. The crucial assumption of static theory (without which idea of the static economy could not have been developed as it has been developed) is that a static economy (static, because tastes and resources are unchanging) can be treated as if it were in equilibrium: the quantities produced and consumed will be (near enough) the equilibrium quantities that have just been described.

Keywords: equilibrium; economic theory; static economy; static theory

Chapter.  5586 words. 

Subjects: Macroeconomics and Monetary Economics

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