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This chapter develops a model of a perfectly competitive economy. It does so from a viewpoint of general equilibrium, rather than examining subsets of the economy. The chapter begins with production and then addresses consumption. General equilibrium values for quantities produced, product prices, and input prices are determined.
KeywordsGross Domestic Product Demand Curve Supply Curve Indifference Curve Welfare Maximizer
- 1.Bator FM (1957) The simple analytics of welfare maximization. Am Econ Rev 47:22–59Google Scholar