Why can feedback effects make a general equilibrium analysis substantially diffe

Question

Why can feedback effects make a general equilibrium analysis substantially different from a partial equilibrium analysis? Feedback effects can make a general equilibrium analysis different from a partial equilibrium analysis because in general equilibrium analysis O A. price and quantity adjustments in one market account for adjustments in related markets O B. equilibrium prices and quantities in all markets are determined independently. O c. the impact of a market's price or quantity adjustments is overstated in markets for substitutes. O D. the impact of a market's price or quantity adjustments is understated in markets for complements. OE. the well-being of society as a whole in terms of the utilities of individual members is measured.

Explanation / Answer

1. A. Price and quantity adjustments in one market account for adjustments in a related market.

Explanation: In partial equilibrium analysis, the demand and supply of one industry are considered and the same of the related industries are not considered. However, in general equilibrium, the demand, and supply of an industry and its related industries are considered. So, adjustment in one market must consider the adjustments in the related market.

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