Editing Supply and demand (section)

===Partial equilibrium===
{{main|Partial equilibrium}}
Partial equilibrium, as the name suggests, takes into consideration only a part of the market to attain equilibrium.

Jain proposes (attributed to [[George Stigler]]): "A partial equilibrium is one which is based on only a restricted range of data, a standard example is price of a single product, the prices of all other products being held fixed during the analysis."<ref>{{cite book|last=Jain|first=T.R.|title=Microeconomics and Basic Mathematics|year=2006–2007|publisher=VK Publications|location=New Delhi|isbn=978-81-87140-89-4|page=28|url=https://books.google.com/books?id=fUUoFwco2Z8C}}{{Dead link|date=August 2024 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

The supply-and-demand model is a '''partial equilibrium''' model of [[economic equilibrium]], where the clearance on the [[Market (economics)|market]] of some specific [[good (economics)|goods]] is obtained independently from prices and quantities in other markets. In other words, the prices of all [[substitute good|substitutes]] and [[complement good|complements]], as well as [[income]] levels of [[consumer]]s are constant. This makes analysis much simpler than in a [[general equilibrium]] model which includes an entire economy.

Here the dynamic process is that prices adjust until supply equals demand. It is a powerfully simple technique that allows one to study [[economic equilibrium|equilibrium]], [[Pareto Efficiency|efficiency]] and [[comparative statics]].  The stringency of the simplifying assumptions inherent in this approach makes the model considerably more tractable, but may produce results which, while seemingly precise, do not effectively model real world economic
phenomena.

Partial equilibrium analysis examines the effects of policy action in creating equilibrium only in that particular sector or market which is directly affected, ignoring its effect in any other market or industry assuming that they being small will have little impact if any.

Hence this analysis is considered to be useful in constricted markets.

[[Léon Walras]] first formalized the idea of a one-period economic equilibrium of the general economic system, but it was French economist [[Antoine Augustin Cournot]] and English political economist [[Alfred Marshall]] who developed tractable models to analyze an economic system.