In a two good economy the statement that the equilibrium price in one market occurs where supply equals demand implies that supply equals demand in the other market is referred to as:
A)the law of demand.
B)the first theorem of welfare economics.
C)Walras' law.
D)the second theorem of welfare economics.

Question

Quizplus · Accepted Answer

This statement is referring to Walras' law, which states that the sum of excess demands across all markets must be zero at equilibrium. Therefore, if supply equals demand in one market, it also implies that supply equals demand in the other market. The law of demand refers to the inverse relationship between price and quantity demanded, and the first and second theorems of welfare economics refer to the conditions for achieving efficient outcomes in a market economy.

In a Two Good Economy the Statement That the Equilibrium