The 5th Session of “The Economic Way of Thinking” Lecture Series: Market Equilibrium
On the afternoon of April 8th, 2021, the fifth session of “The Economic Way of Thinking” Lecture Series was held in Auditorium 205 of the Central Main Building, with the theme of “Market Equilibrium”. The event was delivered by Prof. Wang Yong, Tenured Associate Professor of the School of Social Sciences, Tsinghua University to doctorate candidates of Institute for International and Area Studies, Tsinghua University (IIAS-THU).
This lecture consisted of four parts. In the first part, Prof. Wang revealed the relationship between demand identification and equilibrium in terms of the definition and correlation between wants and needs, the law of demand and changes in demand level, inflation, the definition of price elasticity of demand and its drivers, demand elasticity and segment pricing. Later, he explained the role of supply factors in market equilibrium and pointed out that the supply law is that when other conditions remain unchanged, there is a positive correlation between price and demand quantity. The supply drivers include the price of competitors, technology, the price of inputs, expectations and the number of sellers. In the third part, Prof. Wang explored the formation mechanism and definition of market equilibrium, the influence of changes in demand on equilibrium and the influence of changes in supply on equilibrium. In conclusion, he proposed how to look at the evolution from partial equilibrium to general equilibrium by citing extensive real-world cases and the theories of leading economists. He noted that partial equilibrium means that the demand equals the supply in a single market, while general equilibrium means that demand is equal to supply in all markets. Finally, Prof. Wang pointed out that in the context of perfect market competition, if all enterprises pursue profit maximization and each consumer pursues their own utility maximization, when all markets are in equilibrium, it means that the whole society has realized the optimal allocation of resources.
Prof. Wang Yong is Tenured Associate Professor of the Institute of Economics at the School of Social Sciences, Tsinghua University and Member of the Academic Committee of IIAS-THU. Prof. Wang holds a PhD from Guanghua School of Management of Peking University and served as a postdoctoral fellow at Department of Economics of Harvard University. He was appointed as Deputy Director of the Institute of Economics at Tsinghua University in 2012 and further served as Executive Vice President of the Institute of Minsheng Economic Research at Tsinghua University. His research interest covers game theory and its applications, theories of Internet economy and enterprises and park economy.
Text by: Wang Zijing
Typeset & Edited by: Wang Zijing
Reviewed by: Yang Chongsheng