A model of all markets in the economy and not just a single market is called a(n): a

Marketing Jan 12, 2021

A model of all markets in the economy and not just a single market is called a(n):

a. regression model.

b. butterfly-effect model.

c. general equilibrium model.

d. classical model.

Expert Solution

The answer is c).

A general equilibrium exists when prices adjust such that quantity demanded equal to quantity supplied in multiple markets simultaneously. Hence, a model of all markets in the economy is called a general equilibrium model, which allows changes to one market influence also outcomes in other markets.

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