B.P.

Simelane - ECO 301

UNIVERSITY OF SWAZILAND

DEPARTMENT OF ECONOMICS

COURSE CODE: ECO 301

TUTORIAL #: 3

TOPIC: General Equilibrium Analysis & Welfare Economics

1. Write short explanatory notes on the following producer theory concepts:

i) General Equilibrium
ii) Partial Market Equilibrium
iii) Pareto Efficiency
iv) Feasible Allocation
v) Pure exchange economy
vi) Initial endowment
vii) Pareto Efficient allocation
viii) Edgeworth Box
ix) Walras Law
x) Contract curve
xi) Final Allocation
xii) Walrasian Equilibrium
xiii) Excess Demand
xiv) Gross Demand

2. Provide a non-technical outline of the first theorem of welfare Economics.

3. Provide a non-technical outline of the second theorem of welfare Economics.

4. Argue the case why a contract curve in a standard two-person two-commodity pure
exchange economy represents pareto efficient allocations.

5. According to the Walras law, the value of aggregate excess demand is identically zero
and this is true for all possible choices of prices and not just the equilibrium prices.
Provide an algebraic proof of this assertion.

**********************************GOOD LUCK*****************************