Rationality of Choices Made by a Group of Producers and Consumers

Krzysztof Malaga () and Karolina Sobczak ()
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Krzysztof Malaga: Poznań University of Economics and Business
Karolina Sobczak: Poznań University of Economics and Business

Chapter Chapter 6 in Microeconomics, 2022, pp 417-452 from Springer

Abstract: Abstract This chapter examines the problem of making decisions by the community of consumers and producers. The topic is presented first by means of the staticModelstatic market model with exogenous functions of supply and demand. Then the chapter deals with the Arrow-Debreu-McKenzie model which is as an extension of the Arrow-Hurwicz modelModelArrow-Hurwicz modelArrow-Debreu-McKenzie model. Workers who provide labour in production processesProductionprocess and producers who decide about production factorsProductionfactors are consumers too. The chapter shows how solving their optimization problems leads to theWalrasianequilibrium Walrasian equilibriumAllocationof Walrasian equilibrium state determined by a set of prices and a resulting equilibrium allocation. The reader learns whether the equilibrium state exists, when it is reached and then if a set of prices remains in this state.

Date: 2022
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DOI: 10.1007/978-3-031-10554-8_6

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