As an example when we considered the market for air

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Unformatted text preview: en we considered the market for air travel in ECON 201, we did not investigate the effects on the market for train travel or other travel services. By doing that, we essentially assume that only the market for air travel is affected by our investigation and the rest of the travel industry is unaffected and will not respond to activities in the market for air travel. 3 This method of investigation is called Partial Equilibrium Analysis. We sometimes use the phrase "ceteris paribus" in this line of investigation, which is Latin for Everything Else Being the Same. In this course, we begin our training in General Equilibrium Analysis. We no longer restrict our attention to a single market, consumer, or producer in isolation. As a result, we have the opportunity to explore the inter-relationship and interdependence among the various components of the economy. As an example, when considering issues of free-trade (markets for goods and services) we want to investigate the possible impacts on employment (market for labour) and maybe even on exchange rates (the market for money). The multiple market feature of General Equilibrium analysis is described by the assumption of "mutual inter-dependence" or simply as Everything Depends on Everything Else. Now that we know where we are headed, let's begin to build the necessary toolbox of skills to deal with the challenges of this type of analysis. Integral Exponential Powers This can be thought of as a shortcut notation for repeated multiplication of a number by itself. Normal Notation Multiply X by itself once Multiply X by itself twice Multiply X by itself thrice Multiply X by itself four times Multiply X by itself n times X XX XXX XXXX XXXX...X { n times } Exponential Notation X1 X2 X3 X4 Xn Thus, given a number X and an integer n, the exponential power n of a number X can be defined as the product of multiplying X by itself n times. This can be said in a number of ways, each meaning the same thing... "exponential power n of X" "nth exponential power of X" "X raised to the power of n" Let's consider the...
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