Le Chatelier Principle
In the field of economics, the Le Chatelier principle refers to the differences in the responses of decision variables to changes in parameters when additional constraints are imposed on the system. In the context of demand theory, for example, the Le Chatelier principle is the ‘second law of demand’, that demand curves are more elastic in the long run than in the short run. In many models, additional constraints reduce the absolute response of a decision variable to a change in a parameter.
KeywordsComparative statics Conjugate pairs theorem Envelope theorem Le Chatelier principle Parameter values Samuelson P.
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