Psychology Dictionary of ArgumentsHome
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| Equilibrium price: Equilibrium price in economics is the price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers. It represents a market balance, where there is neither a surplus nor a shortage. This price is determined by the interaction of supply and demand forces in a competitive market. See also Equilibrium, Equilibrium theory, Exchange, Price._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Paul A. Samuelson on Equilibrium Price - Dictionary of Arguments
Harcourt I 20 Equilibrium/Modigliani/Samuelson/Swan: Capital/rate of interest/value/measurement/Robinson/Harcourt: (…) it is impossible to conceive of a quantity of 'capital in general', the value of which is independent of the rates of interest (or interchangeably, profits, given the present assumptions) and wages. Yet such independence is necessary if we are to construct an iso-product curve showing the different quantities of 'capital' and labour which produce a given level of national output, or, as is more usual in the theory of economic growth, if we are to construct a unique relationship between national output per man employed and 'capital' per man employed for any level of total national output. That is to say, if we are to construct the neoclassical production function (…). The slope of this curve plays a key role in the determination of relative factor prices and, therefore, of factor rewards and shares. Problem: However, the curve cannot be constructed and its slope measured unless the prices which it is intended to determine are known beforehand; moreover, the value of the same physical capital and the slope of the iso-product curve vary with the rates chosen, which makes the construction unacceptable. SwanVsRobinson/SamuelsonVsRobinson/ModiglianiVsRobinson: (…) critics have suggested that this particular set of arguments shows a failure to understand both the nature of the solution to a set of simultaneous equations, such as is, for example, the essential nature of the Walrasian general equilibrium system, and the lack of any necessary link between the variables in which the equilibrium values of key magnitudes are expressed, on the one hand, and causation, or determination, or explanation, or what you will, on the other. See, for example, Swan [1956](1), p. 348 n14; Samuelson and Modigliani [1966a](2), pp. 290-1 n1. >Causation, >Equilibrium/Walras. RobinsonVsVs/Harcourt: This criticism is, however, unfair. Thus, for example, to argue that, in equilibrium, the wage rate equals the marginal product of labour is not to argue that one is the cause of the other, or that one determines the other. Moreover, it is abundantly clear from the manner in which Joan Robinson's version of the production function is derived (…) and the constructions which are used, that these are not the points at issue. 1. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61. 2. Samuelson, P. A. and Modigliani, F. [1966a] 'The Pasinetti Paradox in Neoclassical and More General Models', Review of Economic Studies, xxxm, pp. 269-301._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconSamu I Paul A. Samuelson The foundations of economic analysis Cambridge 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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