 General equilibrium theory

General equilibrium theory is a fundamental concept in economics that seeks to explain how supply and demand in multiple markets interact simultaneously to determine prices and allocation of resources in an economy. Unlike partial equilibrium analysis, which examines a single market in isolation, general equilibrium considers the interdependencies among various markets. Key components of general equilibrium theory include: 1. **Multiple Markets**: General equilibrium takes into account various goods and services, as well as the factors of production (labor, capital, land, etc.