Partial Equilibrium - Limitations

Limitations

  1. It is restricted to one particular field. Be it a case of an individual, a firm or an industry. It does not take into account the study of economics.
  2. It lacks the ability to study the interrelations of all the parts of the economy.
  3. This analysis will fail if the improbable assumptions, which disconnect the study of specific market from the rest of the economy, are not taken into consideration.
  4. It has been unsuccessful in explaining the outcome of economic disturbance in the market that leads to demand and supply changes, moving from one market to another and thus instigating second, third order waves of change in the whole economy.

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