The Second Principle: Equilibrium

No one — not small firms, big firms, governments, or even you — makes decisions in isolation.  Economists believe everyone is trying to optimize. While you are optimizing your decision making, so is everyone else. Because we exist in a world where everyone is simultaneously optimizing, your decisions influence everyone else and vice versa. One of the core principles is a special situation no one would personally benefit by changing their behavior. In this lesson, Professor Min Sok Lee explores the idea of equilibrium including applications using supply and demand.