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Walrasian system

07 Sep

This,is an economic system or theory that Was postulated by a political economics professor Leon walras .the system basically seeks to explain the economy based on the general equilibrium theory and marginal utility. The system is to encompass the whole field pf value and price in a much more comprehensive manner than had been presented by any previous economist . He assumed perfect competition and uniformity of price throughout the given market and mathematically demonstrated that general equilibrum in such a market requires certain conditions to be satisfied listed thus:
Each individual will have a utility curve for each good and service offered in the maket
The individual will maximise his utility through exchange and
That he will obtain the greatest possible satisfaction when the prices paid in the exchange are proportional to the mu of the good purchased.
In general he said that the basic laws which are at work bring about the equilibrum in the market. The system was exhaustive and complex as it bridged up the gap in the abalysis of the value of resources and their services. Moreso unlike the marshal and neoclassical economist which carries the phrase”other things being equal” the walrasian system sees demand and supply of a commodity to vary with changes in price. It thought all other prices at such was the most comprehensive analysis of general equilibrium. He further perfected his work with the use of mathematics especially algebra and calculus to express economic relationship as functions, derivatives and variables.
He used all the mathematical application with the intension to make economics a pure science but that not withstanding some economist like wicksell had challenged his theory.

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Posted by on September 7, 2014 in Economy with Julius

 

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