Partial Equilibrium - Difference Between Partial and General Equilibrium

Difference Between Partial and General Equilibrium

Partial Equilibrium General Equilibrium
• Developed by Alfred Marshall. • Léon Walras was first to develop it.
• Related to single variable • More than one variable or economy as a whole is taken into consideration
• Based on two assumptions-
  1. Ceteris Paribus
  2. Other sectors are not affected due to change in one sector.
 • It is based on the assumption that various sectors are mutually interdependent.

There is an effect on other sectors due to change in one.
• Other things remaining constant, price of a good is determined •Prices of goods are determined simultaneously and mutually.

Hence all product and factor markets are simultaneously in equilibrium.

Read more about this topic:  Partial Equilibrium

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