Comparative Statics Analysis Concept And Its Application

Do you feel comparative static analysis is giving you a hard time?

If Yes! Online Assignment Expert is the right platform for you. Here, our economics assignment help experts are not only going to clarify your doubts regarding comparative static analysis but also provide real-life examples to make you gain command over this topic.

Economics is a vast subject that incorporates a lot of theories for describing a number of economic processes and phenomena. So, in a way, the models serve as a means to represent various hypotheses. Comparative static analysis talks about the derivations of such hypotheses.

Examples- The Key!

Basically, comparative static analysis is a technique that is used to investigate how various economic factors affect the market equilibrium. Here, the supply remains constant whereas the demand is altered.

This analysis mainly focusses on the external forces which change the equilibrium change in some other model. The experts of our economics assignment writing services call this external factor as exogenous variables. Too hard to understand? Let us do it the way our economics assignment help experts guide students with this. We do it through an example. So, imagine any industry, say an automobile industry. The requisites for carrying out comparative static analysis are the supply and demand.

Example 1

See the image below, we can clearly see the demand and supply of the auto-mobile industry. As the price is decreasing, it is well evident how the demand is increasing. All the factors which are related to demand such as the interest rate and quantity of automobile would be affected.

For this, when our economics assignment help experts carried out the comparative statics analysis, this was the graph which they got, keeping the supply constant.

We hope now, it is clear how to carry on comparative static analysis for any real life situation, isn’t it?

Example 2

Now let us take another example to make your concepts clearer. Consider a situation where the market has a good equilibrium and the government wants to enhance the desired output. Then what will it do in this situation?

In this situation, the government would bring in more employment opportunities with the help of new expenditure. Now, this new expenditure is what our economics assignment help experts call ‘exogenous’ variable.

Basically, this method of analysis proves to be powerful for microeconomics as compared to macroeconomics. Microeconomics has higher probability of maximisation or minimisation as compared to macroeconomics.

This was all about comparative static analysis and the application of the technique in real life. Our panel of economists have been helping students understand various concepts of microeconomics as well as macroeconomics. Now that you are thorough with this type of analysis, you can have a look at various other topics on which we have guided students via our blog section.

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We hope we have been useful in clarifying your doubts about comparative static analysis. So, what are you waiting for? Contact us for assistance in any topic, in any subject, any time you want.

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