Tuesday, April 13, 2010

Comarative microstatics

There is change in time.The change in time brings changing in the condition of demand and supply.This,in turn,leads to the change in equilibrium.Hence,comparative micro statics refers to a comparative study of different equilibrium at different points of time.It compares one equilibrium with other equilibrium.But it does not study the disequilibrium that occurs in passing from one equilibrium to other.According to prof.Schneder"The comparative analysis of two equilibrium positions may be described as comparative static analysis.Since it studies the alternative in the equilibrium position corresponding to an alteration in a single datum."
The comparative micro statics has been illustrated.The original equilibrium when equilibrium price and equilibrium quantity.When demand increases from the equilibrium is at.Here,equilibrium price is and equilibrium quality.The comparative study of two equilibrium points and is called comparative micro statics.But it does not explain the process through which new equilibrium is attained.It is silent as to how equilibrium is reached from quantify and price.
It is how evident that micro economics does not study the economy as a whole.It studies the small parts of the national economy.This study is related to the particular unit.For example,in micro economics,we study how a firm determines its quantity of production and price or how it determines the wages of labour.Since micro economics studies how prices of goods and factors of production are determined and how resources are allocated in different uses.

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