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ECN 203 (8), General Competitive Equilibrium

ECN 203 (8), General Competitive Equilibrium - Chapter 8...

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Chapter 8: General Competitive Equilibrium Brief chapter, examines more in detail the concept of General Competitive Equilibrium (GCE) , the standard of highest efficiency in a market system. What GCE implies, and what it doesn’t imply in terms of an economy and society.
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General Equilibrium Vs GCE General Equilibrium – the situation in which all markets (goods and factor) are simultaneously in equilibrium. General Competitive Equilibrium (GCE) – the situation in which all perfectly competitive markets are in equilibrium simultaneously with the nice assumptions satisfied. Inherent in the definition of GCE is that the “nice assumptions” ( no market power and no market failure ) are in effect.
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GCE and Pareto Optimality GCE implies that the economy operates under the condition of Pareto Optimality , the standard of highest efficiency in a market system. Pareto Optimality – a situation where there is no way to make one person better off without making someone else worse off.
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