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Economics - Concept of Stable Equilibrium

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Added on  2019-10-30

Economics - Concept of Stable Equilibrium

   Added on 2019-10-30

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Running head: ECONOMICSEconomicsName of the StudentName of the UniversityAuthor note
Economics - Concept of Stable Equilibrium_1
1ECONOMICSTable of ContentsIntroduction......................................................................................................................................2Concept of Stable Equilibrium........................................................................................................2Government Intervention.................................................................................................................4Stability for Australian Economy....................................................................................................4Stabilization instrument...................................................................................................................5Conclusion.......................................................................................................................................6References........................................................................................................................................7
Economics - Concept of Stable Equilibrium_2
2ECONOMICSIntroductionIf market is left free then demand and supply condition achieves equilibrium. In theabsence of any externality demand and supply forces adjusts to restore equilibrium. Here comesthe concept of stable equilibrium. Stable equilibrium is a state where no external force is neededto bring back equilibrium. Microeconomic stability concerns with the stability in an individualmarket. For the overall economy, macroeconomic stability is considered. Sometimes,government intervention becomes essential to bring efficient outcome. This is the situation ofmarket failure. The paper finally evaluates the state of equilibrium for present AustralianEconomy. Concept of Stable Equilibrium Figure 1: Microeconomic stability (Source: as created by the Author)The figure above describes stability in a single market. dd is the demand curve and ss isthe supply curve in the market curve. The two curves intersect at point e. Corresponding to point
Economics - Concept of Stable Equilibrium_3

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