Discussion
Walras argued that all .............. and ..................... in all markets are determined simultaneously through their interaction with one another.
Answer: A
Walras argued that all prices and quantities are determined simultaneously.
In Walrasian general equilibrium, every market is linked to every other: the price of one good affects demand for others, factor prices affect costs and incomes, and so on. The equilibrium prices and the quantities bought and sold in all markets are therefore determined together, as the solution of one system of equations.
Demand and supply are the functions that determine prices and quantities, not the outcomes themselves, and costs are derived from factor prices and quantities. The determined variables are prices and quantities.
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